Debentures

Debentures are fixed-interest securities on which the issuer pays interest at a fixed rate and for a specific term. In this way, debentures are similar to term deposits. The difference is that term deposits offered by financial institutions while debentures are issued by companies which are not licensed to take deposits. Instead companies offering debentures are subject to debt securities law and must issue a prospectus. Often, the interest income paid on debentures is higher than the rate paid on cash investments because of the longer term of the investment.

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