Question

Mention two specific advantages to a company from the issue of debentures.

Answer 1

1. No Dilution of Control: Debenture holders are creditors, not owners, so issuing debentures does not affect the control of existing shareholders.
2. Fixed and Tax-Deductible Interest: Interest on debentures is a fixed expense and is tax-deductible, helping the company reduce its tax burden and increase profits for shareholders.