Write the difference between debentures and bonds.
The major differences between debentures and bonds are as follows −
Debentures
The instrument used to raise long term finances.
Issued by private companies.
Known as debenture holders.
Short term tenure.
Debentures = assets – (Liabilities + shareholders reserve+ Bonds).
They are both unsecure and secure in nature.
High risk.
Gives high interest rate.
Liquidity is done after bond holders.
Periodical payment structure.
Can be convertible to equity shares.
Bonds
Instruments which highlights the debt taken towards the holders.
Issued by corporations, government agencies and financial institutions.
Known as bondholders.
Tenure is higher than debentures.
Bonds = assets – (liabilities + shareholders reserve + debentures).
They are secure in nature.
Less risk compared to debentures.
Gives you low interest.
Liquidity bonds paid first.
Accrued payment structure.
Cant convertible to equity shares.
Published on 24-Jul-2020 10:44:52
