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Understanding The Difference Between Debentures And Stocks And Bonds
A debenture is an unsecured loan you offer to a company. The company does not give any collateral for the debenture, but pays a higher rate of interest to its creditors. In case of bankruptcy or financial difficulties, the debenture holders are paid later than bondholders. Debentures are different from stocks and bonds, although all three are types of investment. Below are descriptions of the different types of investment options for small investors and entrepreneurs. Debentures And Stocks Debentures are more secure than stocks, in the sense that you are guaranteed payments with high interest rates. The company pays you interest on the money you lend it until the maturity period, after which, whatever you invested in the company is paid back to you. The interest is the profit you make from debentures. While stocks are for those who like to take risks for the sake of high returns, debentures are for people who want a safe and secure income. Debentures And Bonds A debenture is more secure than a stock, but not as secure as a bond. In case of bankruptcy, you have no collateral you can claim from the company. To compensate for this, companies pay higher interest rates to debenture holders. Additional Help
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Article Tags: Loans, Risk, Stocks, Taxes, Credit, Small Business, Mutual Funds, Investments, Bonds, Debentures Article Source: http://www.articlesbase.com/business-opportunities-articles/understanding-the-difference-between-debentures-and-stocks-and-bonds-47265.html About the Author:
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
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