Question 1 Introduction
A debenture is a form of long-term limited company finance, often at a fixed rate of interest.
The main advantage of owning shares in a limited company is that the investment of the owner or investor is safe because liability for the debts of the company is limited.
Ownership of ordinary shares in a limited company entitles the shareholder to a share of profits in the form of dividends; the amount of the dividend normally varies in line with the amount of profit made.
The Companies Act 2006 requires that every year companies pay out all of their profits in the form of dividends.
The nominal value of shares in a limited company will fluctuate with the market value of the shares.
A debenture is a form of long-term limited company finance, often at a fixed rate of interest.
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