0
What else can I help you with?
What are the disadvantages of debentures?
Debentures hold greater risk because the company could eventually go out of the business. so this type of investment should be done very carefully.
Advantages of debentures over shares?
Debentures offer several advantages over shares, primarily in terms of fixed returns and risk. Debenture holders receive regular interest payments, providing a predictable income stream, while shareholders may receive variable dividends that are not guaranteed. Additionally, debentures generally carry lower risk, as they have a higher claim on assets in the event of liquidation compared to shareholders. Lastly, issuing debentures can be less dilutive to ownership, allowing existing shareholders to maintain greater control over the company.
Why are the type of debentures?
Debentures are categorized based on various characteristics, such as security, convertibility, and redemption. Secured debentures are backed by collateral, while unsecured debentures rely on the issuer's creditworthiness. Convertible debentures can be transformed into equity shares, while non-convertible debentures cannot. Additionally, redeemable debentures have a fixed maturity date for repayment, whereas irredeemable debentures do not have a set repayment term.
Why do investors who buy subordinated debentures usually receive higher interest rates than other bondholders?
Investors who buy subordinated debentures receive higher interest rates than other bondholders primarily because subordinated debentures are lower in the capital structure and thus carry a higher risk. In the event of liquidation, subordinated debenture holders are paid after senior debt holders, increasing the likelihood that they may not receive their full investment back. This increased risk compensates investors with higher returns to attract them to these more precarious investments. As a result, the higher interest rates reflect both the risk and the potential for greater rewards associated with subordinated debentures.
Merits and demerits of shares and debentures?
Shares represent ownership in a company and can provide dividends and capital appreciation, but they also come with higher risk as their value can fluctuate significantly. Debentures, on the other hand, are debt instruments that offer fixed interest payments and are generally considered safer than shares, but they do not provide ownership rights or the potential for capital gains. While shares can lead to higher returns, they also expose investors to market volatility; debentures offer stability but may have lower overall returns. Ultimately, the choice between shares and debentures depends on an investor's risk tolerance and financial goals.
How do you make debentures more popular.?
the companies that have issued debentures in recent years.give suggestions to make debentures more popular?
What are the risks involved in debenture?
Debentures carry several risks, primarily credit risk, which is the possibility that the issuer may default on interest payments or principal repayment. Interest rate risk also exists, as rising rates can decrease the market value of existing debentures. Additionally, liquidity risk may arise if investors find it difficult to sell the debenture in the market. Lastly, inflation risk can erode the purchasing power of fixed interest payments over time.
How is interest paid on debentures is shown in Financial statments?
interest paid for debentures is a/an
What is risk management based on?
ISO 31000 is a family of standards relating to risk management codified by the International Organization for Standardization.
What is Secured Debentures?
Secured debentures are a type of debt instrument that is backed by specific assets of the issuing company, providing security to investors in case of default. Unlike unsecured debentures, which rely solely on the creditworthiness of the issuer, secured debentures may grant holders a claim on particular assets, such as property or equipment. This collateral reduces the risk for investors and often results in lower interest rates compared to unsecured debt. They are commonly used by companies to raise capital while offering a degree of protection to bondholders.
What is debentures and its types?
Debentures are long-term financial instruments used by companies to raise capital, representing a loan made by investors to the issuer. They typically pay a fixed rate of interest and are secured against the company's assets or may be unsecured. The main types of debentures include convertible debentures, which can be converted into equity shares; non-convertible debentures, which cannot be converted; and redeemable debentures, which are repayable after a specified period, as opposed to irredeemable debentures, which have no fixed maturity date.
Discount on issue of debentures is a?
capital loss to be written off over the tenure of the debentures .
