When an organisation sells a share of ownership to the public, they receive a certain capital in return. That capital is what is called share capital. The value of the initial share capital remains the same even if the value of the share increases or decreases. There are two major types of share capitals – preferred stock and common stock. Debentures are used by organisations and the government as a debt instrument to issue the loan. It serves as an IOU between the purchaser and the issuer and is also commonly known as a ‘bond’. There is no issue of any collateral. However, the investors lay their bets on the general creditworthiness and reputation of the individual or organisation issuing. They not only collect the investment but also the timely interest. Click ahead to know more.

Saket Kumar

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