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Advantages and disadvantages of Debentures

Submitted by frndzzz on Tue, 04/24/2018 - 07:58

Check out Advantages and Disadvantages of Debentures discussed below. So let us find out some information  to know more about it. The debentures which are generally issued by the corporations, are promises to pay specific amount of principal or money at a specified time or date over the particular course of the loan tenure, during which time interest is paid at a fixed rate on decided dates.

Advantages of Debentures :

Debentures is used to provide long terms funds to the company when needed.

Debenture holders usually do not have any rights of voting and hence debt financing does not result into dilution of control

Generally the rate of interest which is being paid to debentures is lower than the rate of interest which is paid on shares.

In case of debenture , it can be redeemed when the company has surplus funds.

Debentures are less costly, fixed payment on of interest and no ownership dilution.

Disadvantages of Debentures :

It becomes difficult for common people to buy debentures as they are of high denominations.

Problems such as cash outflows, financial risk, restricted convenants and obligatory payment is observed

Compared to stocks, the debentures are more secured but will lead to lower rate of theoretical return of funds.

Debenture holder are not consider the owners of the company.

Debenture Holder wil have no right to vote during the general meeting of the company

Generally debenture financing may enhance the financial risk

They have a fixed maturity hence the provision has to be made for the repayment

As debentures can be considered as one of the secure investment the returns are less.

During the tenure of debenture , payment of interest on debenture is mandatory and hence at times when company is making a low profits. Non payment of the interest can lead to bankruptchy of the firm or a company.

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Benefits of Debentures

Submitted by frndzzz on Tue, 04/24/2018 - 08:14

Check out Benefits of Debentures discussed below. So let us find out some information on benefits to know more about debentures. Also check out Advantages and disadvantages of debentures for more details

Debentures Benefits :

Debentures helps to provide long term funds to the companies.

The rate of interest which is payable on debentures is generally lesser than the rate of interest which is being payabe on shares.

Features of Debentures

Submitted by frndzzz on Tue, 04/24/2018 - 08:08

Check out Features of Debentures discussed below. So let us find out some information on features to know more about debentures.

Debenture Features :

The rates which is to be paid or payable on debentures is fixed.

Debenture may be convertible

No voting rights on debenture, holder does not have right to vote in a meeting.

Instrument of loan

Debentures can be redeemed after a fixed period of time.

Debenture holders can be considered as creditors of the company carrying a fixed rate of interest.

Kinds of Debentures

Submitted by frndzzz on Tue, 04/24/2018 - 08:11

Check out Kinds of Debentures discussed below. So let us find out some information on kinds to know more about debentures. Related post on advantages & disadvantages of debentures

Debenture Kinds :

Debentures Based of Redeemability - Redeemable and Irredeemable

Debentures Based on Security - Secured debenture and Unsecured debenture

Debentures Based on Transferability - Bearer and Registered

Advantages and Disadvantages of Mutual Funds

Submitted by frndzzz on Wed, 02/20/2019 - 11:29

Advantages and Disadvantages of Mutual Funds are as follows, So let us check it out one by one.

Advantages:

The following are the advantages of mutual funds:

1. Easy to Invest

Mutual Fund investment is easy, simple and convenient.It is easy to buy and redeem shares in mutual funds.

2. Managed Professionally

Mutual funds uses professional manager to make various decisions regarding the companies to invest on. The portfolio of stocks/bonds is managed by assigned experts.