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Debentures
In law, debenture refers to a document which creates or acknowledges a debt. In corporate finance, it refers to an instrument used by companies to loan money. Debentures are generally transferable.
299 Questions
What is the difference between a debenture and a bond?
Long-term debt securities issued by the Government or any of the State Government's or undertakings owned by them or by development financial institutions are called as bonds. Instruments issued by other entities are called debentures. The difference between the two is actually a function of where they are registered and pay stamp duty and how they trade.
reference: http://www.fimmda.org/useful_links/faq.asp#p3
What are the types of debentures?
What is a Debenture?
A Debenture is a debt security issued by a company (called the Issuer), which offers to pay interest in lieu of the money borrowed for a certain period. In essence it represents a loan taken by the issuer who pays an agreed rate of interest during the lifetime of the instrument and repays the principal normally, unless otherwise agreed, on maturity.
These are long-term debt instruments issued by private sector companies. These are issued in denominations as low as Rs 1000 and have maturities ranging between one and ten years. Long maturity debentures are rarely issued, as investors are not comfortable with such maturities
Debentures enable investors to reap the dual benefits of adequate security and good returns. Unlike other fixed income instruments such as Fixed Deposits, Bank Deposits they can be transferred from one party to another by using transfer from. Debentures are normally issued in physical form. However, corporates/PSUs have started issuing debentures in Demat form. Generally, debentures are less liquid as compared to PSU bonds and their liquidity is inversely proportional to the residual maturity. Debentures can be secured or unsecured.
What are the different types of debentures?
Debentures are divided into different categories on the basis of: (1)convertibility of the instrument (2) Security
Debentures can be classified on the basis of convertibility into:
· Non Convertible Debentures (NCD): These instruments retain the debt character and can not be converted in to equity shares
· Partly Convertible Debentures (PCD): A part of these instruments are converted into Equity shares in the future at notice of the issuer. The issuer decides the ratio for conversion. This is normally decided at the time of subscription.
· Fully convertible Debentures (FCD): These are fully convertible into Equity shares at the issuer's notice. The ratio of conversion is decided by the issuer. Upon conversion the investors enjoy the same status as ordinary shareholders of the company.
· Optionally Convertible Debentures (OCD): The investor has the option to either convert these debentures into shares at price decided by the issuer/agreed upon at the time of issue.
On basis of Security, debentures are classified into:
· Secured Debentures: These instruments are secured by a charge on the fixed assets of the issuer company. So if the issuer fails on payment of either the principal or interest amount, his assets can be sold to repay the liability to the investors
· Unsecured Debentures: These instrument are unsecured in the sense that if the issuer defaults on payment of the interest or principal amount, the investor has to be along with other unsecured creditors of the company.
Define redemption of debentures out of capital?
When debentures are redeemed out of capital, no transfer is made
to general reserve or debenture redemption reserve account. In this method it is assumed that the company has sufficient funds to redeem the debentures. So the profits are not utilised to replace the debentures.It affects adversely to the Working Capital of the company.
Lets understand meaning of Preference Share in Layman language. As name suggest preference shares are those kind of shares which has preference in payment of dividend, and price of shares over equity shares. If company earn net profit, then first return to preference shareholders are given at first, and then to equity shareholders.
What are five different financial applications for the time value of money?
Equipment purchase or new product decision,
Present value of a contract providing future payments,
Future worth of an investment,
Regular payment necessary to provide a future sum,
Regular payment necessary to amortize a loan,
Determination of return on an investment,
Determination of the value of a bond.
Discount on issue of debentures is a?
capital loss to be written off over the tenure of the debentures .
What is a bank debenture forfaiting program?
Simply go at: http://www.treasurydirect.gov/instit/statreg/fraud/fraud_prime1.pdf
What are zero-coupon debentures or bonds?
A zero coupon bond pays no interest. Thus the market price for such a bond is always LESS than the maturity (face) value. The amount by which the bond is priced below its maturity value is known as the DISCOUNT.
For example, a $100 zero coupon bond maturing in one year priced to yield 10% (in simple terms) would be sold to the investor for $90.91 on the date of issue. The investor would receive no payments from the borrower until maturity, at which time the investor receives the $100 face value. Some brokerages will take a regular bond with coupons and "strip" it. They'll remove the coupons and sell the corpus of the bond separately from the coupons. A zero-coupon bond that was issued as such will normally have a really long maturity date--five to ten years isn't uncommon. You buy them as long-term investments...if you've got a child who will begin college when she's 19, you might want to buy ten-year zero-coupons that mature as the child enters each year of college.
122.22
A term debenture have value of Rs.100/-(fore one debenture).thus the value of 100000 debenture is equal to 10 crore.The interest will be Rs.800000/- per year
Did Mitsubishi 3000gt have a convertible?
Yes. The 3000GT regular hatchback model was built in Nagoya, Japan without hatches or rear-quarter windows. At the factory they add strengthened A-pillars and specially tuned springs and shocks which is exclusive to the Spyder. Then it is shipped to the U.S. And transported in closed trucks to ASC.. ASC (American Sunroof Corporation) later renamed to American Specialty Cars would then go to work cutting off the roof and adding reinforcement to the car. This was the first American folding hardtop convertible since the 1957 Ford Skyliner. The Spyder was made in VR4 and SL models. The VR4 boasted 320 HP, all wheel drive, all wheel steering and adjustable suspension while the SL was FWD and 222 HP and none of the goodies. Approx 1600 were built, split fairly evenly between the two models.
With the push of a single button, the roof retracts into the trunk in about 35 seconds.
The VR4 version cost over $65,000 when new, and is considered a collectible car.
See http://www.3000GTSpyder.com for complete details, magazine articles, photos, original Mitsubishi press kit and more.
Also try http://www.3000gtSpyderRegistry.com/asc.html to see ASC building the 3000GT Spyder.
A portfolio manager is someone who manages a group of investments for someone else.
What does a pooled issue mean?
A pooled issue, in relation to securitisation, is where a number of different entities will raise capital through a single vehicle which then on-lends to the respective entities. The entities will "pool" their assets together as security for the bond allowing smaller funding requirements to be met through the capital markets where a minimum issue size would be in excess of £40-50m.
Benefits:
Access to Capital Markets: Individual entities can raise smaller amounts allowing access to the Capital Markets
Access to long term funding: reducing refinance risk (whereas traditional bank lenders currently will only lend short term 5-10yrs max)
Shared costs: legal, trustee and other associated costs split.
Credit Rating: Combined credit can improve the credit rating thus tightening pricing.
What is the max boyce song about the girl from crumlin who kept his debenture?
EMI have released "The Very Best of Max Boyce" on 0946 337414 2 3
What is the meaning and definition of redemption of debenture?
Redemption of Debenture was enacted into Indian law in 2000. It states that any Indian company with a debenture trust must also have a plan in place for its investors, in case of the company's failure.
What are the Merits and demerits of debentures?
Hi
merit of dbenture - trading on equity is possible as debenture holders get a lower rate of return than the earnings of the company.
demerit of debenture-cost of raising capital through debentures is high of high stamps duty.
Do most of the people invest in debentures or shares?
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Discount on issue of shares and debentures?
Issue of shares at discount
A company may issue shares at a discount i.e at a value below its par value. The following conditions must be satisfied in connection with the issue of shares at a discount :-
The shares must be of a class already issued
Issue of the shares at discount must be authorised by resolution passed in the general meeting of company and sanctioned by the company law board.
The resolution must also specify the maximum rate of discount at which the shares are to be issued
Not less than one year has elapsed from the date on which the company was entitled to commence the business.
The shares to be issued at discount must issued within 2 months after the date on which issue is sanctioned by the company law board or within extended as may be allowed by the Company Law Board.
The discount must not exceed 10 percent unless the Company Law Board is of the opinion that the higher percentage of discount may be allowed in special circumstances of case.
How is interest paid on debentures is shown in Financial statments?
interest paid for debentures is a/an
Difference between share and share capital?
Shares are units into which the capital of a company is divided.
Share Capital is the total amount of money contributed by the shareholders of the company, over which they will have claim at the time of liquidation of the company.
How do you care and clean LED clothing?
The way you can care for the LED clothing is you remove the battery when you don't need to use or finished. To clean the LED clothing is to take off the battery and put it in the washing machine.
