Discounted Debentures

Discounted Debentures Debentures which sell at less than their par value Consequently their interest yield is higher than that promised on the face of the debenture. Thus the effective yield of a 12.5% debenture bought at Rs 80/- will be 15.62%. A discount of 20% or more is called deep discount and debentures which sell at such discounts are deep discount debentures. Discounted debentures can offer a higher rate of return than fixed deposits with companies, as well as better security. See, however, TRANSFER OF DEBENTURES.

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