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What is the Difference Between Shares & Debentures? |
What is the Difference Between Shares & Debentures? Shares make you the owner of the co where as the debenture are just like loan given by you to the co. A shareholder may get higher profits if the company earns more...in the forms of dividends Where as the debentureholders will get fixed return depending upon the interest percentage the deb carries Shares represent ownership in the company. Debentures are debts of the company. Both are ways for a company to raise money. The previous answer is correct. More info: If the shares of the company are listed on a stock exchange, their value are likely to vary considerably depending upon how well the company is doing. Dividends paid to shareholders, if any, can vary depending upon the profit made by the company and the company's policy of how much of that is paid out in dividends. If the company does well, shares can be sold for much more than purchased; if the company does badly (or is perceived to be doing badly), the shares are worth less. Debenture values vary less, usually more on interest rate changes than on company profitability. The amount paid periodically on debentures is usually a fixed percentage of the 'face value' of the debenture. The amount of capital paid back at 'maturity' is also usually fixed. So, shares are more risky than debentures, but have greater possible range or results (good and bad). Simple difference between Share and Debenture is that Share is your Capital in company whereas Debenture is loan given by you to the company.So, if you have share, you may not get back it from company unless Company wants it back.The only way is to transfer it somebody else meaning sale it. Whereas Debenture being loan, is returned to Debenture holder with Interest. There are many other difference .But that is only academic. |
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