Shares vs Debentures

What is the definition of shares?

• A form of currency

• Ownership in a company

• A type of clothing

• A type of fruit

Name two types of debentures.

• Partially convertible debentures

• Perpetual debentures

• Secured debentures

• Convertible debentures, Non-convertible debentures

What are the advantages of shares?

• Shares provide immediate liquidity

• Shares do not involve any risk

• Shares guarantee a fixed return on investment

• Shares offer ownership in a company, potential for capital appreciation, dividend income, and diversification.

What are the disadvantages of debentures?

• Low interest rates

• Higher interest rates, obligation to pay interest in difficult times, potential dilution of ownership

• No obligation to pay interest

• No dilution of ownership

Explain the redemption process of debentures.

• Debentures are redeemed by converting them into shares of the company.

• Debentures are redeemed by increasing the interest rate paid to debenture holders.

• Debentures are redeemed by transferring ownership to a third party.

• Debentures are redeemed by the company repaying the principal amount to debenture holders on or before the maturity date.

How do shares represent ownership in a company?

• Shares represent ownership through unlimited liability, voting rights, and asset claims.

• Shares represent ownership through employee benefits, dividends, and asset claims.

• Shares represent ownership through profit-sharing, dividends, and asset claims.

• Shares represent ownership through voting rights, dividends, and asset claims.

What is the difference between convertible and non-convertible debentures?

• Non-convertible debentures have higher interest rates than convertible debentures.

• Convertible debentures are always issued by government entities, while non-convertible debentures are issued by private companies.

• Convertible debentures are riskier than non-convertible debentures.

• Convertible debentures can be converted into equity shares, while non-convertible debentures cannot.

Why are shares considered a risky investment?

• Shares have a fixed value

• Shares always provide guaranteed returns

• Shares are not affected by external factors

• Shares are considered a risky investment due to their value being influenced by various factors and the absence of guaranteed returns.

What is the main purpose of issuing debentures?

• To decrease the company's credit rating

• To reduce the number of shareholders

• To raise long-term funds without giving up ownership control

• To increase short-term liquidity

How are dividends distributed to shareholders?

• By flipping a coin

• Through a lottery system

• Based on the weather forecast

• Based on the number of shares they own