1. What is Debenture? What are its Characteristics?
Ans: Debenture is an instrument in writing given by a company acknowledging the liability for the total amount received as a result of issue of debentures and agreeing thereby to pay the money raised after the expiry of the stipulated period at a certain rate of interest per annum.
Following are the characteristics of Debentures:
a. It is an acknowledgement of debt or loan taken by a company.
b. A debenture is generally redeemable.
c. Its face value is pre- determined.
d. It is issued under the common seal of the company.
e. It does not carry any voting rights like shares.
f. Debentures are issued in the form of a certificate.

2. What are different types of debentures?
Ans: Following are the different types of debentures:
A. On the Basis of securities:
a. Secured or Mortgaged debenture: When debentures are secured by the assets of the company they are called Secured or Mortgaged debenture.
b. Naked or Simple debenture: When no security is given against debenture they are called Naked or Simple debenture.  

B. On the Basis of Redemption:
a. Redeemable debenture: When debentures are repayable after a specified period they are called redeemable debentures.
b. Irredeemable debenture: When debentures are repayable only when the company goes into liquidation they are called irredeemable debenture.

C. On the Basis of Registration:
a. Registered debenture: Registered debenture is payable to a person whose name is appears in the register of debenture holders.
b. Bearer Debenture: A bearer debenture is one which is payable to the bearer of the debentures.
D. On the basis of convertibility:
a. Convertible debenture:  Convertible debentures are those debentures which can be converted into shares.
b. Non-convertible debenture: Non-convertible debentures are those debentures which cannot be converted into shares.

3. Write the difference between Share holder and Debenture holder?
Ans: Following are the difference between Share holder and Debenture holder:

4. What are the differences between Shares and Debentures?
Ans: Following are the differences between Shares and Debentures:

5. What is Redemption of Debentures? What are the different methods of Redemption of Debentures?
Ans: Redemption of debentures means the repayment of debentures. As debenture is shown in the liability side of balance sheet it is necessary for the company to discharge these liabilities. Thus redemption of debentures denotes discharge of liability on account of debentures by repayment to the debenture holders. The redemption is made on the expiry of specified period mentioned in the debenture certificates.
Following are the methods of redemption of debentures:-
(i) By payment in  lump sum at the end of fixed period:  Redemption of debenture by making payment in lump sum at the end of the fixed period means redemption of the whole of the debentures on a fixed date by making payment at a time to the  debenture holders.
(ii) Redemption in instalments:  Redemptions in instalment means that all the debentures are not redeemed on a particular date. Instead when the company decides to redeem only a part of the total debenture annually on a particular date and whole of the debenture are redeemed within the fixed period from the date of issue of debentures.
(iii) Redemption by purchase in open market:  Sometimes debentures of some companies are quoted on the stock exchanges. When the price of such debentures quoted in the stock exchange is lower than the amount agreed to be paid by the company at the time of redemption as per the terms of issue, the company may discharge its liabilities in respect of such debentures by purchasing them from the open market.
(iv) Redemption by Conversion into shares:  Sometimes a company may issue fully convertible debenture (FCD)/ partly convertible debenture (PCD) i.e. the debentures are either fully or partly convertible into shares. If such debentures are converted into shares, it means that the debentures have been redeemed to the extent of conversion into shares.

6. What is Debenture Redemption Reserve?
Ans: Debenture Redemption Reserve Account is created out of profits to the extent of 50% of the amount of debentures to be redeemed. The Debenture Redemption Reserve is created before the commencement of redemption. It is shown on the liabilities side of balance sheet.

7. What is sinking fund?
Ans: A sinking fund is a fund, created by a charge against or an appropriation of profits represented by specific investments, which is brought into existence for a specific purpose, such as replacement of an asset at the expiration of its life or the redemption of debentures.

8. What is meant by: Loss on issue of Debenture?
Ans: When the company issue debentures at par but repayable at premium, it gives rise to loss on issue of debenture. Again where the company issues debentures at a discount but repayable at a premium, it also gives rise to loss on issue of debenture.

9. Mention two advantages of issuing debentures?
Ans: Following are the advantages of issuing debentures:
a. For meeting expenditure on modernization of plant.
b. For setting up of new projects.
c. For meeting long term requirements of working capital.
d. For expansion and diversification of plant.