Doubts

SOLUTION No, there are no restrictions relating to discount on issue of debentures.

SOLUTION Yes, because debentures have priority over shares as to repayment in case of winding up of the Company.

SOLUTION An investor would prefer to invest in shares of a Company rather than in its debentures because shares provide liquidity, capital appreciation and higher rate of return in the…

SOLUTION An investor would prefer to invest partly in shares and partly in debentures because shares provide liquidity and capital appreciation and debentures provide safety and assured interest.

SOLUTION An investor would prefer to invest in debentures because: (i) Interest on debentures is payable irrespective of the Company making a profit or incurring a loss whereas dividend on…

SOLUTION Shares cannot be converted into debentures or any other security whereas the debentures can be converted into shares if the terms so provide.

SOLUTION BasisEquity SharesDebenturesRisk involvedEquity Shares are always unsecured, Hence, they are at a greater risk.Debentures are always secured. Hence, they are relatively safe and are almost risk free.

SOLUTION Basis of DistinctionShareholderDebentureholder1. StatusThese are the owners of the Company.These are the lenders of the Company.2.  DividendShareholders get dividend from the Company.Debentureholders get interest from the Company.

SOLUTION Basis of DistinctionShareDebenture1. Capital Vs Loan  A share is a part of the Capital of the Company; therefore, the shareholders are the owners of the Company.  A debenture is…