Briefly explain three advantages of issuing debentures.

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Solution

Three advantages of issuing debentures are :

(a) The issue of debentures is suitable in the situation when the sales and earnings are relatively stable.

(b) As debentures do not carry voting rights financing through debentures does not dilute control of equal share holders on management.

(c) Debentures are fixed charged funds and do not participate in profits of the company.

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