Debentures Meaning: Definition, Examples, and Translations
๐ฐ
Add to dictionary
debentures
[dษชหbษntสษrz ]
Definition
Context #1 | Noun
finance
Debentures are long-term debt instruments issued by companies or governments to raise capital. They are backed by the creditworthiness and reputation of the issuer. Debentures typically have a fixed interest rate and maturity date, and bondholders receive periodic interest payments until the debenture matures.
Examples of usage
- Many investors prefer investing in debentures due to their fixed returns.
- Companies issue debentures to finance their operations or expansion projects.
Translations
To see the translation, please select a language from the options available.
Interesting Facts
Finance
- Debentures are often used by companies to raise funds without giving up ownership.
- They typically come with fixed interest rates, which means you know exactly how much you'll earn over time.
Legal Aspects
- Debentures are legally binding agreements, similar to a contract, outlining the terms of borrowing and repayment.
- They can be secured, backed by assets, or unsecured, based solely on the company's creditworthiness.
History
- Debentures played a significant role in the industrial revolution, helping many companies fund their expansions.
- The use of debentures has evolved, with various structures now existing to meet diverse investment needs.
Investment Strategy
- Investors may choose debentures for their typically lower risk compared to stocks.
- They can also provide a steady income stream, making them popular among retirees and conservative investors.
Origin of 'debentures'
Main points about word origin
- The term comes from the Latin word 'debentur,' meaning 'they owe.'
- The word relates to the idea of owing money and has been used since the 16th century.
The word 'debenture' originated from the Latin word 'debere', which means 'to owe'. Debentures have been used as a form of borrowing for centuries, dating back to the early days of commerce. They have evolved over time to become a common financial instrument for companies and governments to raise funds.