In this video, we explain all about Debentures, how it works, types, advantages, and disadvantages.
What is a Debenture?
Debentures refer to long-term debt instruments issued by a government or corporation to meet its financial requirements—for example, a government raising funds to construct roads for the public.
Type of debentures?
- Secured debentures
- Unsecured debentures
- Redeemable debentures
- non-redeemable debentures
- convertible debentures
- Non-convertible debentures
Advantages of debentures
- Easy way to raise capital for the companies without pledging assets.
- Higher interest returns for the investors.
- Flexible and can be traded in the market.
Disadvantages of debentures
- The financial burden for the company
- Unsecured form of investments for the investor
- The investor has no rights over the company
- Investors do not enjoy voting rights.
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