A debenture may be defined as an acknowledgement of a debt
or loan raised by a company, just as share capital of a
company is divided in large number of parts, each part
being called a share, a loan raised by a company may be
divided in a large number of parts, each being called a
debenture. A debenture holder is certain of return on his
A bond is a debt-security in which the authorised issuer
owes the holders a debt and depending on the terms of bond
is obliged to pay interest or to repay the principal at a
later date termed as maturity. It can also be called as a
formal contract to repay borrowed money with interest at
A bond is fixed note of guaranted payment of intrest and
principal on a maturity date.
A debenture is similar but unsecured and is not guaranted
with any specific asstes of the company.It hsa a
characterization of more along with a line of stock
but bond is more a direct finance and loan.
the basic difference between bonds & debentures is that bonds are issued by goverment (central, state, recently some muncipal corporations also)and debentures are issued by private companies. both are issued to collect the loan (fund)from public in small amounts for specific period of time & pre-determine interest.
wat ammet mentioned above is right,, adding to that an
improtant poing,,A DEBENTURE CAN BE CONVERTED TO A SHARE OR
SECURITY. ex: M&M issued debenture for raising a loan of
6000 cr. so it will issue debentures with a option of
convertable i.e, CONVERTIBLE DEBENTURES,.after certain
period that debentures can be converted to M&M shares which
u can sell them at that time price..
Bonds are not coverted into shares or securities.. almost
Suppose a company has issued deep discount bands which has
face value of INR 200000 maturing after 25 years.the bondes
was issued at INR 5300.whar is the effective interest rate
earned by the investor from this bond?