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| 1. |
Write any three difference between equity shares and debentures |
| Answer» \t\xa0Equity SharesDebentures1. StatusShares are ownership securities. The holders of shares are the owners of a company.Debentures are creditorship securities. Debenture holders are creditors of a company.2. Return on InvestmentDividend is paid on shares by the company. The rate of dividend is not fixed.Interest is paid on debentures at a fixed rate.3. RepaymentEquity shares capital is not to be returned back except in the case of liquidation.The amount of debentures is paid back to debenture-holders after a fixed time.4. Right to ParticipateShareholders have a right to participate in the affairs of the company.Debenture holders can’t participate in the affairs of the company.5. LiquidationEquity shares get the refund only when all liabilities have been paid off.Debenture holders get payment in priority as compared to all the creditors.6. SecurityShareholders being owners, have to bear maximum risk.Debentures are usually secured by a fixed or floating charge.\t | |