Transform your daily workflows and OCR Convertible Debenture

Aug 6th, 2022
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Simple guide on the way to OCR Convertible Debenture

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How to OCR Convertible Debenture

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this is a lecture from open tuition to benefit from the lecture you should download the free lecture notes from open tuition com so lets go through and carry on with this monstrous chapter on financial instruments by looking at convertible debentures so we know what a debenture is its a way of a business being able to raise finance so when we issue debentures we debit the bank and we credit a financial liability and then that financial liability is then treated at amortized cost okay thats what weve looked at so far isnt it however were now gonna look at a convertible debentures and a convertible debentures is another form of finance so were raising money but the way in which we incentivize the investors is by allowing them the option to go through there and instead of receiving cash on redemption they can go through there and receive shares within the business instead so its like a little bit of a reward yeah you can take cash if you want but there might be better terms withi

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This feature gives the bondholder some security that may offset some of the risks involved with investing in unsecured debt. A convertible debenture differs from convertible notes or convertible bonds, generally in that debentures have longer maturities.
Types of a Convertible Debenture: Fully Convertible Debenture: These are debentures in which the whole value of debentures can be converted into equity shares of the company. Partly Convertible Debenture: In this kind of debentures, only a part of the debentures will be eligible for conversion into equity shares.
Non-convertible debentures (NCD) are those which cannot be converted into shares or equities. NCD interest rates depend on the company issuing the NCD. NCD investment can be held by individuals, banking companies, primary dealers other corporate bodies registered or incorporated in India and unincorporated bodies.
A convertible debenture is a non-valued investment. The benefit for founders/management is that deferring the value of the business may enable founders/management to increase the valuation beyond the amount of debenture financing.
A convertible debenture is a type of long-term debt issued by a company that can be converted into shares of equity stock after a specified period. Convertible debentures are usually unsecured bonds or loans, often with no underlying collateral backing up the debt.
Fully Convertible Debenture: These are debentures in which the whole value of debentures can be converted into equity shares of the company. Partly Convertible Debenture: In this kind of debentures, only a part of the debentures will be eligible for conversion into equity shares.
Difference between Convertible Debentures and Non-Convertible Debentures. Non-convertible debentures have a fixed value and hence earn fixed returns when they mature. Convertible debentures have a lower rate of interest than non-convertible debentures since holders can convert them into equity shares.
Based on convertibility, there are two kinds of debentures which are convertible and non-convertible debentures. Convertible debentures are debentures that can be converted into equity of the company. In case of non-convertible debentures, they cannot be converted into equity shares of the company.

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