Debentures
A debenture is an unsecured debt instrument issued by companies to raise long-term capital without diluting equity. It serves as a loan where the company promises to repay the principal amount along with interest over a set tenure. The components of a debenture include: - Principal: The amount borrowed from investors. - Tenure: The duration until repayment. - Interest Rate: The rate at which interest is paid to investors. - Repayment: Terms outlining how the loan will be repaid. Debentures can be particularly useful for companies with lower creditworthiness, as they don’t require collateral.
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