Difference Between Shares And Debentures

What are the Shares of the company?

Each portion of a corporation is referred to as a share when the whole value of the company is divided into equal portions. The business separates its ownership into equal shares and offers these on the primary market for public purchase in order to raise money from the general public.

The value of each share is known as the face value of the share when the company divides ownership into equal portions. When the public buys shares in a company, it is implied that they are purchasing ownership in the company and its profits in the proportion of the total percentage of shares of the company they have purchased.

What are Debentures in Stock Market?

As we now know, businesses can raise funds without diluting their ownership by issuing debentures. This is similar to how firms sell ownership in their companies by issuing shares in the market.

Companies sell debentures to the general public on the open market in exchange for a certificate stating the debenture's maturity period, the point at which the principal will be returned to the holder, and the annual interest rate that holders will receive up until the debenture matures. It is comparable to a loan that the public has given to the issuer.

Differences between Shares and Debentures

Let’s deep-dive in detail to find out the differences between shares and debentures: