You get a fixed preannounced return on your investment.
You do not gain from the performance of the company.
You may be affected by the inability of the company to honor its commitment to you by way of payment.
You have a priority claim over the shareholders in case of a company going bankrupt. Country specific laws apply.
Some debentures are converted into equity shares after a specific period
Note: Please read the terms and conditions carefully.
Debentures hold greater risk because the company could eventually go out of the business. so this type of investment should be done very carefully.
Cost is the major advantage. Debentures are to be serviced for the contracted period of time, while equity servicing is perennial.
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There are many advantages and disadvantages of owner funds. The advantages and disadvantages of owner funds depends largely on the person.
þ Debentures can be used to raise very long-term finance, (ex. 25 years.)
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Debentures hold greater risk because the company could eventually go out of the business. so this type of investment should be done very carefully.
Cost is the major advantage. Debentures are to be serviced for the contracted period of time, while equity servicing is perennial.
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