Professional Documents
Culture Documents
on
Basic Concepts of
Investment
BY
N. DURGA CHAITANYA PRASAD
Research Scholar, SOM
DEFINITIONS:
A commitment of funds made in the
expectation of some positive rate of return
TYPES:
Cumulative Preference Shares
Non-Cumulative Preference Shares
Redeemable Preference Shares
Non-Redeemable Preference Shares
Convertible Preference Shares
Non-Convertible Preference Shares
Cumulative Convertible Preference Shares
Bonds
A Bond is a long-term debt instrument that promises to pay a
fixed annual sum as interest for a specified period of time.
Bonds have a face value and interest rate.
The maturity date of the bond is usually specified at the time
of issue.
The redemption value is also stated in the bonds. Bonds are
traded in the stock market
TYPES:
Secured Bonds and Unsecured Bonds
Perpetual bonds and redeemable bonds
Fixed interest rate bonds and floating
interest rate bonds
Zero coupon bonds
Debentures
Debentures are generally issued by the private
sector companies as a long term promissory
note for raising loan capital.
The company promises to pay interest and
principal as stipulated.
FEATURES:
Debenture holders are the creditors of the
company carrying a fixed rate of interest.
Debenture is redeemed after a fixed period of
time.
Debentures may be either secured or
unsecured.
Interest payable on a debenture is a charge
against profit and hence it is a tax deductible
expenditure.
Debenture holders do not enjoy any voting
Debentures
Ordinary Debenture
Mortgage Debenture
Non-convertible Debentures
Partly Convertible Debentures
Fully Convertible Debenture
Redeemable Debentures
Irredeemable Debenture