CHAPTER 20
Long-Term Finance: Shares, Debentures and Term Loans
LEARNING OBJECTIVES
- Explain the features of ordinary shares.
- Describe the benefits and valuation of rights shares.
- Discuss the pros and cons of debentures and preference shares.
- Elucidate the features of term loans.
- Prepare a loan amortization schedule.
introduction
Two long-term securities that are available to a company for raising capital are shares and debentures. Shares include ordinary shares and preference shares. Ordinary shares provide ownership rights to investors. Debentures or bonds provide loan capital to the company, and investors get the status of lenders. Loan capital is also directly available from the financial institutions and banks to the companies. What ...
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