DEPARMENT OF BUSINESS

ADMINISTRATION

Financial System and Institution

Topic – Bond and Debentures

:Submitted to: Submitted by:
SUBMITTED TO :
Dr. Anu Kohli Name- Pratibha Pal
Associate Professor Semester- 3rd
Roll No.- 2210019025471(60)
 What are Bonds?
Bonds are a type of fixed-income investment where an
investor loans money to an entity for a fixed period of
time at a fixed interest rate. They are generally
considered less risky than stocks and can provide a
steady stream of income. Examples of bonds include
government bonds, corporate bonds, and municipal
bonds.
 Types of Bonds
Government bonds: Government bonds are the safest form of
investment. The types of government bonds are Treasury bonds, Treasury
bills, and Treasury notes.
Corporate bonds: Issued by corporations to raise funds from the market.
Investment grade bonds and high-yield bonds are types of corporate bonds.
Zero coupon bonds: Zero coupon bonds don’t make regular interest
payments. These bonds are sold at a discounted price compared to their face
value. The bondholder receives the face value upon maturity.
Convertible bonds: Bonds that can be converted into a predetermined
number of common shares of the issuing company. They offer the potential for
capital appreciation and income. Floating-rate bonds: Bondswith interest rates
that reset periodically based on a reference interestrate (e.g., LIBOR or the
Prime Rate). They provide protection against rising interest rates and falling
bond prices for the bondholder.
Examples of Bonds
Some examples of bonds include US
Treasury bonds, IBM corporate bonds,
and California municipal bonds. Each
type of bond has its own unique
characteristics and risks. It is important to do
your research and understand the risks
before investing.
What are debenture
Debentures are a type of bond that is not secured by
collateral. They are backed only by the creditworthiness
and reputation of the issuer. Debentures are generally
considered riskier than secured bonds, but they can offer
higher returns. Examples of debentures include
convertible debentures and subordinated debentures.
The Types of Debentures
The following are the most common types of debentures:
Convertible debentures: Investors holding this type of debenture have the
option to convert them into common equities. At the time of issuance,these
debentures mention the investor’s rights, the trigger date for conversion, and the
date.
Non-convertible debentures: These types of debentures can’t be
changed into common stocks like convertible debentures.
Registered debentures: The registered debentures are registered in the
company. If the holder wants to change the ownership of such a debenture, it is
done through a clearing facility.
Unregistered debentures: These are unregistered or bearer debentures.
These types of debentures don’t require the issuer to maintain any records.
Redeemable debentures: Holders can redeem the debenture on a specific
date mentioned on the company’s debenture certificate. Irredeemable
debentures: Irredeemable debentures, as the name suggests, are not
redeemable. These debentures are redeemable only when the company goes
into liquidation.
Examples of Debentures

Some examples of debentures includeTesla

convertible debentures, Bank of America
subordinated debentures, and
Coca-Cola unsecured debentures.
Each type of debenture has its own unique
characteristics and risks. It is important to do your
research and understand the risks before investing .
THANK YOU