Answer the following questions, each in about eight to ten sentences.

“Issue of shares and debentures play a very important role in long term credit.” What are they ? How do they help ?

Long term finances are usually made through Stocks and Debentures.

Stocks - Stocks are smaller units of any company which people can buy/exchange for a price. The price value varies based on the company’s value and the revenue they make.

Stocks are a smaller part of company assets and the earnings of any company, and by selling them, the organization make money for their expense. The higher the stock value, the higher the money they make.

Debentures – Debentures are the debts that are borrowed without any collateral but completely based on the creditworthiness and reputation of the organization. The debentures are made by a legal agreement signed by both the borrowers and the lenders.

Debentures greatly help companies since it has lower interest rates and longer repayment dates without any collateral.