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What is Debenture
Debenture is a term for securities issued by the company in order to obtain financial resources to invest in their own business. Debenture is a medium-or long-term loan for which the company promises to pay the agreed interest.

Debenture is a security issued by the company in order to obtain financial resources to invest in their own business. Debenture is a medium-or long-term loan for which the company promises to pay the agreed interest. Debentures may be convertible (convertible into shares, but with a lower interest rate) or non-convertible (non-convertible into shares, but with a higher interest rate).

What is debenture for in practice?

Debentures, as well as other securities are used to raise additional funds from the public (which can buy these bonds). Conditions vary according to the legislation in individual countries. In Great Britain, debentures are always secured by corporate assets, while in the USA, debentures are unsecured loans. Generally, debentures are, in terms of the investor less secure than bonds, on the other hand, can bring higher profits. Debentures are, in terms of security and profits, on the halfway between bonds and shares.

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Last update: 07.03.2016

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