Shares, Debentures And Bonds - SS1 Economics Lesson Note

Shares, debentures, and bonds are different types of financial instruments that companies can issue to raise capital.

• Shares are units of ownership in a company. When you buy a share in a company, you become a shareholder and have a stake in the company's profits and losses. Shareholders can also have voting rights on important decisions, such as electing board members.

• Debentures are a type of debt instrument that companies can issue to raise capital. When you buy a debenture, you are essentially lending money to the company in exchange for a fixed rate of interest. Unlike shares, debentures do not give you ownership in the company.

• Bonds are also a type of debt instrument, but they are typically issued by governments rather than companies. When you buy a bond, you are lending money to the government in exchange for a fixed rate of interest. Bonds are generally considered to be less risky than shares, as they are backed by the government.