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Questions and Answers
What is the feature of debentures?
Debentures are long-term debt instruments issued by companies to raise capital, and they pay a fixed rate of interest to the debenture holders.
How do debentures differ from equity shares?
Debentures represent a loan to the company and provide a fixed rate of return, while equity shares represent ownership in the company and provide a variable return in the form of dividends.
What are the advantages and disadvantages of debentures for companies?
Advantages of debentures include lower cost of capital compared to equity, but the disadvantage is the obligation to make fixed interest payments regardless of company performance.
