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What are the advantages of issuing debentures to following parties?
i.) Company : Controlling position of the existing equity shareholders does not get affected as debentures do not carry any voting rights. The post tax cost associated with debentures is less. Debentures provide funds for a specific period. During the period of inflation the company may be compelled to issue debentures as a source of raising long term capital.
ii.) Investors : Investment in debentures is a good option for conservative investors as well as institutional investors as fixed rate of interest is payable by the company and security available for the investment.
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