Bonds and debentures

What Are Bonds?
Bonds are contracts issued by companies and government bodies to raise there funds for medium to long term. Which means a company or government organizations can fulfill there medium/long term financial needs by taking loan from the general public by issuing debt instrument, called bonds. Bonds are supposed to be a secured investment but offers low to medium interest rate. It is called as secured investment because if the company goes bankrupt those who hold bonds are the first once to receive there money.
Having a bond does not make you a shareholder and you do not have the right to vote in the general meetings of the company.

What Are Debentures?
Debentures are debt instruments issued by companies to raise there funds for short or medium term. Which means a company can fulfill there short/medium term financial needs by taking loan from the general public by issuing debt instrument, called as debentures. Investors get a fixed rate of interest known as coupon rate in the form of return on there investment in debentures periodically.
Debentures are freely transferable but having a debentures does not make you a shareholder and you do not have the right to vote in the general meetings of the company.

Types of Debentures

  • Secured Debentures
  • Unsecured Debentures
  • Convertible Debentures
  • Non Convertible Debentures