Solution: The principal is redeemable at maturity, A debenture-holder enjoys prior claim on the assets of the company over its shareholders in the event of liquidation and trustee is appointed to preserve the interest of the debenture holders are the factors why the debentures more attractive to the investors.
Why is it preferable to be debenture holder rather share holder?
Preferred shareholders are typically promised dividend payments and some liquidation rights. A debenture can be less risky than preferred shares but will also typically have a lower expected return. With a debenture, the owner is promised full repayment of the principal investment plus interest over a specific period.
What are the factors which make debentures attractive to investors?
Solution(By Examveda Team) They enjoy a high order of priority in the event of liquidation, Stable rate of return and No risk are the factors which make debentures attractive to investors.
What is Capital market and types?
Capital markets refer to the venues where funds are exchanged between suppliers of capital and those who demand capital for use. Primary capital markets are where new securities are issued and sold. The secondary market is where already-issued securities are traded between investors.
What are the advantages and disadvantages of debentures?
1. Debenture are Preferred by Investors. Since they attract cautious investors by offering definite security and safety of investment, issue of debentures can raise more funds. 2. Debenture are Less Investment Risk.
What makes a convertible debenture an attractive investment?
In some cases, a company will allow an investor to convert their debenture into shares of the company. It makes them an attractive option for investors because they can gain equity in the company. There are different kinds of convertible debentures. Some simply give the investor the option to turn the debt into equity at some point.
Can a debenture be converted into a share?
In some cases, a company will allow an investor to convert their debenture into shares of the company. It makes them an attractive option for investors because they can gain equity in the company.
Why are investors interested in US government debentures?
Among investors, there is very little fear that the U.S. government will ever default on its loans. Thus, the government can issue debentures, and investors will purchase them simply because they are confident in the government’s ability to pay them back.
