Pls answer this question no 1
Dear Student
Difference between equity shares and Debentures is as follows:
1. Ownership: Equity Shareholders are the owners of the company whereas debenture holders are the creditors of the company.
2. Returns: Equity Shareholders get dividends as a return on their shares whereas the debenture holders interest on debentures as interest on their investments. Dividend might depend upon the residual profits if any whereas interest has to be paid to debenture holders without any fail.
3. Voting rights: Since equity shareholders are the owners of the company they have a say in the functioning of the company, i.e. they have voting rights in the company. Debenture-holders on the other side are not a part of the any's top management and thus they have no voting rights in the company.
4. State of Holder: Equity shareholders are the owners and have huge interest in the company. Debenture holders are outsiders to the company and cannot participate in day to day working of the company.
5. Redemption: Equity shares are not redeemed till the company dissolves. Debentures have a known redemption date at the time of issue. Thus debentures are redeemable but equity shares are not.
6. Degree of Risk involved: Risk involved in debentures is comparatively lesser in debentures as there is a surety of both interest amount and redemption amount on maturity whereas in Equity shares the shareholders face huge risk on their investments as there is no surety of dividends and the face value amount of share.
Thus, investment in shares is risky bur can offer huge returns too.
-Regards
Difference between equity shares and Debentures is as follows:
1. Ownership: Equity Shareholders are the owners of the company whereas debenture holders are the creditors of the company.
2. Returns: Equity Shareholders get dividends as a return on their shares whereas the debenture holders interest on debentures as interest on their investments. Dividend might depend upon the residual profits if any whereas interest has to be paid to debenture holders without any fail.
3. Voting rights: Since equity shareholders are the owners of the company they have a say in the functioning of the company, i.e. they have voting rights in the company. Debenture-holders on the other side are not a part of the any's top management and thus they have no voting rights in the company.
4. State of Holder: Equity shareholders are the owners and have huge interest in the company. Debenture holders are outsiders to the company and cannot participate in day to day working of the company.
5. Redemption: Equity shares are not redeemed till the company dissolves. Debentures have a known redemption date at the time of issue. Thus debentures are redeemable but equity shares are not.
6. Degree of Risk involved: Risk involved in debentures is comparatively lesser in debentures as there is a surety of both interest amount and redemption amount on maturity whereas in Equity shares the shareholders face huge risk on their investments as there is no surety of dividends and the face value amount of share.
Thus, investment in shares is risky bur can offer huge returns too.
-Regards
