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what is
Debenture?
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Debenture refers to a debt instrument that a company issues to borrow money from investors.
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It is a type of bond that typically offers a fixed rate of interest and a predetermined date of repayment.
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Unlike equity shares, debentures do not represent ownership in the company and do not provide voting rights to the holder.
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Debentures can be secured or unsecured, depending on whether they are backed by collateral or not.
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Secured debentures are safer investments for bondholders because they are backed by assets that can be seized in case of default.
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Unsecured debentures, on the other hand, are riskier but offer higher returns.
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Debentures can be traded on stock exchanges, making them a liquid investment option.
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They are typically issued by companies with good credit ratings and a stable financial position.
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Debenture holders are considered creditors of the company and are paid interest before dividends are paid to equity shareholders.
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Debentures can be a useful source of long-term financing for companies looking to raise funds for expansion or other business purposes.
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