Community Forex Questions
What exactly is a debenture?
Debenture is a type of bond, which is a debt instrument. In fact, it is a large debt instrument that represents debt security. The debt security may represent the company's promise to repay the investor at a future date or to do something else of value.
A debenture is an instrument that a lender, such as the bank, uses to provide capital while securing the repayments against the borrower's assets. Hence it is a form of security for lenders.
"Debenture" refers to a bond or other debt instrument that is not secured by collateral. Debentures are not backed by collateral, so they must rely on the creditworthiness and reputation of the issuer for support. Corporations and governments often issue bonds to raise funds or capital. Debentures are debt instruments that are not backed by collateral and typically have a maturity period of more than ten years. Debentures are only backed by the creditworthiness and reputation of the issuer. Corporations and governments commonly issue bonds to raise capital or funds. Some debentures can be converted into equity shares, while others have the opposite option. Like most bonds, debentures may pay periodic interest payments known as coupons. Coupons are a type of interest payment. Like other types of bonds, debentures are documented in a document called an indenture. An indenture protects the interests of both bond issuers and bondholders. There are specific features of a debt offering specified in the contract, such as the maturity date, the timing of interest or coupon payments, and the method of interest calculation, among others. The government typically issues long-term bonds, defined as those with maturities greater than 10 years. The government bonds, which are considered low-risk investments since they are backed by the government that issued them, are available for purchase.

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