Debentures are bonds that are not backed by any physical collateral.
What is debenture and its characteristics?
- Because the issuer anticipates paying back the loans with money from the sale of the business initiative they helped fund, debentures are also known as revenue bonds.
- Debentures are not backed by tangible property or collateral. They have the issuer's full faith and credit as their only guarantee.
- An extended source of funding is provided by the debentures. They are made up of a protracted predetermined maturity phase. The debentures are typically repaid at the conclusion of their 10–20 year maturity period. The business returns the investor's principal investment amount at maturity.
- A debenture is a bond that is not backed by the issuing company's assets but rather simply by its good name. Investors purchase this form of bond because they think the entity, or corporation, issuing it is in good financial standing.
- Debentures are only supported by the issuer's creditworthiness and reputation. Debentures are a common way for both businesses and governments to raise money.
- There are four different kinds of debentures: first and second, convertible and non-convertible, registered and bearer, secured and unsecure, and registered and bearer.
To learn more about debentures backed by assets refer to:
brainly.com/question/14788206
#SPJ4
