Question

. What is a debenture?

. Common stock has voting rights. What are common stockholders voting for

. What are the risks when owning bonds?

. What is a defensive stock?

Answer 1

Debentures are long term security issued by companies to raise money not backed by assets or collateral but rather by the creditworthiness of the company.

Stockholders vote on issue of shares, stock split, mergers and acquisitions,selection of directors, operational and structural change in the company.

Risks while owning bonds are interest rate risk as value of bond decrease with increasing YTM,
Default Risk is the risk if the company does not pay its due at the maturity or misses coupon payments.
Liquidity risk is the risk when bonds cannot be easily sold in secondary market.
Inflation Risk is the risk when the inflation rate are high and eat away the returns on the bonds.


Defensive stocks are stocks which pay regular coupons and provides very stable return even during economic downturn.

Please Discuss in case of Doubt

Best of Luck. God Bless
Please Rate Well