Question

Discuss the various characteristics of debenture.

Answer 1

Various characteristics of debentures are as follow :

(a) Specified maturity period-Debentures are issued for a specified period, on expiry of which, debentures are redeemed.

(b) Long-term debt instrument-Debentures have long-term maturity period for raising borrowed funds. Thus, these provide finds to companies on long-term basis.

(c) Fixed rate of interest-Debentures carries a fixed rate of interest which is prescribed at the time of issue of debentures.

(d) No voting rights-Debenture holders do not have voting rights to participate in the company's management as like shareholders.