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Question
what is the difference between debenture and preference share
 Question Submitted By :: Finance
I also faced this Question!!     Answer Posted By  
 
Answer
# 1
Debenture are long-term loans. They carry fixed INTEREST.
Payment of interest is not under the control of directors
of a company.Debenture holders are creditors of a company.

Preference Shares are part of capital of a company. They
carry fixed DIVIDEND. Payment of dividend is under the
control of directors of a company. Preference Shareholders
are the owners of a company.
 
Is This Answer Correct ?    83 Yes 16 No
Parvati
 
Answer
# 2
debenture are the promissory notefor raising loan capital
whereas preference shares is considered as the hybrid
security they can clain on assest of the company.
 
Is This Answer Correct ?    55 Yes 7 No
Neeraj Khosla
 
 
 
Answer
# 3
the company should pay amount first to the debenture holder
than preference share holder when company is in insolvency
stage
 
Is This Answer Correct ?    47 Yes 14 No
Balla Veerabhadra Rao
 
Answer
# 4
Intrerest on Debenture carries Tax Benefit Whereas
Preference Divident does not caary Tax Benefit on it.
 
Is This Answer Correct ?    36 Yes 13 No
Mansi Damania
 
Answer
# 5
Debentures are debt security issued by companies, having a
certain MATURITY and bearing a stated COUPON RATE.
Debentures may be unsecured or secured by ASSETS such as
land and building of the issuing company. Debenture holders
have a prior claim on the earnings (coupon) and ASSETS in
the event of liquidation, as compared to PREFERENCE and
equity shareholders.

preference shares represent partial ownership in a company,
although preferred stock shareholders do not enjoy any of
the voting rights of common stockholders.The main benefit
to owning preference shares are that the investor has a
greater claim on the company's assets than common
stockholders Preferred shareholders always receive their
dividends first and, in the event the company goes bankrupt.
 
Is This Answer Correct ?    20 Yes 3 No
Avinash Kunder (mumbai)
 
Answer
# 6
Preference share is a hybrid form of equity shares &
debenture.
Debentuer is a borrowed capital,but preference is owned
capital.
Interest on debenture paid before tax payment & dividend on
prefrence share paid after payment of tax.
Debenture hloder doesnot have the right to vote, whereas in
special case prefrence shareholder have right to vote
Debentuer carry less risk & give regular certain income but
prefrence share is risky as compared to debenture & didn't
give certanity of income
 
Is This Answer Correct ?    26 Yes 10 No
Hem Lata
 
Answer
# 7
debenture is the most common form of loan capital in which
is made available by investors on a long term basis. it is
a document containing details of an interest bearing loan
made to a company.

Preference shares are shares dividned, it has especal
pirority incase of winding up company. these type of shares
are based on fixed time in the year. profits are shared to
Preference share holders before Equity share holders.
 
Is This Answer Correct ?    9 Yes 3 No
Boston
 
Answer
# 8
the debentures can get the interest in all the
times(profit/loss)

but the preference shares can get interest based upon the types
like if the preference share is cumulative on means the
interest is added with next year interest(at that time of
loss only)like wise the preference share differ from debentures.
 
Is This Answer Correct ?    7 Yes 1 No
Karthick Kumar
 
Answer
# 9
preference shares has minimum risk where as equity has more
risk. Another difference is that equity shareholder have
right to participate & vice versa
 
Is This Answer Correct ?    43 Yes 41 No
Srikar
 
Answer
# 10
debentures are the debt security or it is long term loans to
the company and pay fixed interest for the debentures.
where as preference shares are is part of capital, and pay
devidend for them

interest on debentures are tax deductible where dividend on
preference capital is tax liable
 
Is This Answer Correct ?    2 Yes 1 No
Naresh
 

 
 
 
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