What are the types of shares and debentures?
What are the types of shares and debentures?
The debentures are of following types:
- Secured Debentures.
- Convertible Debentures.
- Unsecured Debentures.
- Registered Debentures.
- Non-convertible Debentures.
- Bearer Debentures.
What are examples of debentures?
Examples of debentures are Treasury bonds and Treasury bills.
What are convertible and non-convertible debentures?
Convertible debentures are a type of debentures that can be converted into equity shares of the company. Non-convertible debentures are defined as the type of debentures that cannot be converted into equity shares of the company.
What is the difference between debenture and dividend?
Debenture holders get the interest. Dividend can be paid to shareholders only out of profits. Interest can be paid to debenture holders even if there is no profit. Dividend is an appropriation of profit and so it is not allowed as deduction.
What is the difference between debentures and equity shares?
Equity shares capital is not to be returned back except in the case of liquidation. The amount of debentures is paid back to debenture-holders after a fixed time. Shareholders have a right to participate in the affairs of the company. Debenture holders get payment in priority as compared to all the creditors.
Is it safe to invest in debentures?
NCDs from one single sector (NBFCS that focuses on personal loans) are not safe to invest in. This can lead to higher risk exposure. NCDs from the secondary markets have always delivered higher returns in the past.
Is it good to invest in debentures?
Considered low-risk investments, these government bonds have the backing of the government issuer. Corporations also use debentures as long-term loans. Debentures are advantageous for companies since they carry lower interest rates and longer repayment dates as compared to other types of loans and debt instruments.
What are zero interest debentures?
Also known as zero coupon bonds/debentures, ZIBs do not carry and explicit/coupon rate of interest. They are sold at a discount from their maturity value. The difference between the face value of the bond and the acquisition cost is the gain/ return to the investors.
What are registered and bearer debentures?
Registered debentures are recorded in the company’s debenture-holders’ register with full details of every debenture holder. Bearer debentures are negotiable. They can be transferred by mere delivery and registration of transfer is not necessary.
How many types of shares are there?
Thus, there are two types of shares: equity shares and preferential shares.
Why equity shares are better than debentures?
Shareholders have a right to participate in the affairs of the company. Debenture holders can’t participate in the affairs of the company. Equity shares get the refund only when all liabilities have been paid off. Debenture holders get payment in priority as compared to all the creditors.
Which is better equity or debentures?
Like shares, the market value of a debenture can be used by the holders as collateral security to temporary loans….(h) Voice in the Management:
| Equity Shares | Debentures | |
|---|---|---|
| 2. Return on Investment | Dividend is paid on shares by the company. The rate of dividend is not fixed. | Interest is paid on debentures at a fixed rate. |
