Grade 12 Exam  >  Grade 12 Videos  >  Accounting for Grade 12  >  Question and Solution of Issue of Debenture (Part - 3)

Question and Solution of Issue of Debenture (Part - 3) Video Lecture | Accounting for Grade 12

57 videos|79 docs|68 tests

FAQs on Question and Solution of Issue of Debenture (Part - 3) Video Lecture - Accounting for Grade 12

1. What is a debenture?
Ans. A debenture is a type of long-term debt instrument issued by companies or government entities to raise funds from the general public. It is a form of loan that investors provide to the issuer in exchange for periodic interest payments and the repayment of the principal amount at maturity.
2. How does a debenture differ from a share?
Ans. While both debentures and shares are financial instruments used by companies to raise capital, they differ in terms of ownership and priority of payment. Debentures represent debt and do not provide ownership rights to the holders, whereas shares represent ownership in the company. Additionally, debenture holders have a higher priority in receiving payments, including interest and principal, compared to shareholders in case of liquidation.
3. What are the types of debentures?
Ans. There are several types of debentures, including: - Convertible debentures: These can be converted into shares of the issuing company at a predetermined conversion ratio. - Non-convertible debentures: These cannot be converted into shares and offer fixed interest payments until maturity. - Secured debentures: These are backed by specific assets of the company, providing a higher level of security to the debenture holders. - Unsecured debentures: These are not backed by any specific assets and rely solely on the creditworthiness of the issuer.
4. How are debentures different from bonds?
Ans. Debentures and bonds are similar in nature as both are debt instruments issued by companies or government entities. However, there are a few key differences. Debentures are typically issued by corporations, while bonds are usually issued by government entities. Bonds are often traded on stock exchanges, whereas debentures are not. Additionally, bonds usually have a longer maturity period compared to debentures.
5. What are the advantages and disadvantages of investing in debentures?
Ans. Some advantages of investing in debentures include regular fixed interest income, higher priority in payment compared to shareholders, and the possibility of capital appreciation if the debenture is convertible into shares. However, there are also some disadvantages, such as the lack of ownership rights, the risk of default by the issuing company, and the potential for lower returns compared to other investment options. It is important for investors to carefully consider these factors before investing in debentures.
57 videos|79 docs|68 tests
Explore Courses for Grade 12 exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Download the FREE EduRev App
Track your progress, build streaks, highlight & save important lessons and more!
Related Searches

Extra Questions

,

Semester Notes

,

shortcuts and tricks

,

Exam

,

Question and Solution of Issue of Debenture (Part - 3) Video Lecture | Accounting for Grade 12

,

MCQs

,

pdf

,

mock tests for examination

,

Free

,

video lectures

,

Previous Year Questions with Solutions

,

past year papers

,

study material

,

Question and Solution of Issue of Debenture (Part - 3) Video Lecture | Accounting for Grade 12

,

Sample Paper

,

Viva Questions

,

Summary

,

practice quizzes

,

Important questions

,

Question and Solution of Issue of Debenture (Part - 3) Video Lecture | Accounting for Grade 12

,

Objective type Questions

,

ppt

;