help me understand the difference between bonds & debentures .
their pros & cons with respect to each other .
thank you
Concept of bond and debentures are same. The main difference is, bonds are mostly issued by government firms whereas debentures are issued by the companies.
• Bonds are more secure as they are mostly issued by government firms.
• Debentures are unsecured loans but carry a higher rate of interest compared to bond holders and they get periodical interest.
• Bond holders receive accrued payment upon completion of the term
• Bonds are more secure than debentures, but the rate of interest is lower
• In case of bankruptcy, bondholders are paid first, but liability towards debenture holders is less.
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