Debentures definitions
| Word backwards | serutnebed |
|---|---|
| Part of speech | Noun |
| Syllabic division | de-ben-tures |
| Plural | The plural of the word debentures is debentures. |
| Total letters | 10 |
| Vogais (2) | e,u |
| Consonants (6) | d,b,n,t,r,s |
Debentures are long-term debt instruments issued by corporations or governments to raise capital. These types of financial instruments are typically unsecured and backed only by the creditworthiness of the issuer. Investors who purchase debentures are essentially lending money to the issuing entity in exchange for periodic interest payments and the eventual repayment of the principal amount.
Types of Debentures
There are several types of debentures, including convertible debentures that can be converted into equity shares of the issuing company at a predetermined price. There are also non-convertible debentures that cannot be converted into equity shares and are redeemed at maturity. Additionally, secured debentures are backed by specific assets of the issuer, providing an added layer of security to investors.
Features of Debentures
Debentures typically have a fixed maturity date, at which point the issuing company is obligated to repay the principal amount to investors. They also pay a fixed rate of interest, which is usually higher than what is offered on savings accounts or other financial instruments. Debentures are generally traded on stock exchanges, allowing investors to buy and sell them in the secondary market.
Benefits of Debentures
Investing in debentures can provide investors with a steady stream of income through interest payments. They also offer diversification benefits to a portfolio, as they typically have a low correlation with other asset classes like stocks. Debentures can be a relatively safe investment option for those seeking stable returns over a longer time horizon.
In conclusion, debentures are an important tool for companies and governments to raise capital, offering investors fixed income opportunities with varying levels of risk. Understanding the different types and features of debentures can help investors make informed decisions about including them in their investment portfolios.
Debentures Examples
- The company issued debentures to raise capital for expansion.
- Investors purchased debentures as part of a fixed-income portfolio.
- The debentures were secured by the company's assets.
- Debentures can be converted into company stock at a later date.
- The debentures pay a fixed rate of interest to bondholders.
- Bond rating agencies evaluate the creditworthiness of debentures.
- Investors consider debentures a safer investment compared to stocks.
- The company defaulted on its debentures, leading to investor losses.
- Debentures are typically issued with a maturity date for repayment.
- The debentures offered a higher yield than government bonds.