WHAT IS MEAN BY SHARE & DEBENTURE? WHAT IS THE DIFFERENCE
BETWEEN THEM?
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Answer Posted / prasanna
share:A unit of ownership interest in a corporation or
financial asset. While owning shares in a business does not
mean that the shareholder has direct control over the
business's day-to-day operations, being a shareholder does
entitle the possessor to an equal distribution in any
profits, if any are declared in the form of dividends. The
two main types of shares are common shares and preferred
shares.
Debenture:A certificate or voucher acknowledging a debt.
An unsecured bond issued by a civil or governmental
corporation or agency and backed only by the credit
standing of the issuer.
Difference:A debenture is an unsecured loan you offer to a
company. The company does not give any collateral for the
debenture, but pays a higher rate of interest to its
creditors. In case of bankruptcy or financial difficulties,
the debenture holders are paid later than bondholders.
Debentures are different from stocks and bonds, although
all three are types of investment. Below are descriptions
of the different types of investment options for small
investors and entrepreneurs.
Debentures and Shares
When you buy shares, you become one of the owners of the
company. Your fortunes rise and fall with that of the
company. If the stocks of the company soar in value, your
investment pays off high dividends, but if the shares
decrease in value, the investments are low paying. The
higher the risk you take, the higher the rewards you get.
Debentures are more secure than shares, in the sense that
you are guaranteed payments with high interest rates. The
company pays you interest on the money you lend it until
the maturity period, after which, whatever you invested in
the company is paid back to you. The interest is the profit
you make from debentures. While shares are for those who
like to take risks for the sake of high returns, debentures
are for people who want a safe and secure income.
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