What is a debenture (1 Viewer)

[Jyoti!!!!!!!]

I do not know what a debenture exactly is. There are so many defenitions but i don't understand it. Can any one please explain it to me?

 

[exa_boi87]

As I understand a debenture is an offer to the general public from a business as a means of finance. They issue debentures to a number of individuals (can be up to thousands) which is basically terms of a 'loan', where an individual offers an amount of money to invest into the business. The debenture thats offered has a "return" on this investment (eg: 6%) that the indiviudal who loaned the money will recieve based on the terms outlined in the prospectus (eg: per annum, quarterly, or even a lump payout with interest on maturity in a few years).

Once you get the idea, its pretty basic .. but yes, initially I had problems discerning between a debenture and bond >< If youre still having problems grasping it, ill copy and paste the textbook definition and walk through it

 

[Jyoti!!!!!!!]

Thanks a lot but yea i get it. Good Luck

 

[barnsey88]

its often a form of gearing used by a business for purposes of gaining a higher return than the interest paid