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Bonds/Difference between a bond and a debenture
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Question
Hi Doug,
Please explain me the difference between a bond and a debenture.
Thanks
They are the same! Bonds are debt!
When a company wants to raise capital, they either borrow or issue stock. Stock represents ownership, bonds are a borrowing.
When you buy Treasury bonds, you are loaning the government money. Corporate or municipal debentures (bonds) are debt of a company or city/county/state.
When you buy bonds, your investment is generally more secure than stock. With stock, you have more upside.
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Doug Ingram
Expertise
Fixed income portfolio allocation and strategies for institutional investors. Having designed multi-scenario risk quantification and cash flow projection models for nearly 25 years, Strategic Technical Initiatives can answer your regulatory, SFAS 115 allocation, securities selection, and other questions dealing with yield curve placement and portfolio mix strategies. I write the Bond Market Review on behalf of Commerce Street Capital Management.
Experience
Trading and designing portfolio strategies since 1980.
Education/Credentials
Physics and Differential Mathematics
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