Question

What are Bearer Debentures?

Hint:

Bearer debentures work like cash instruments—ownership passes through physical possession only.

Answer 1

Bearer debentures are negotiable instruments that do not include the name of the owner on the certificate. The person who physically holds the debenture certificate is considered the legal owner. These debentures can be transferred simply by handing over the certificate, without any formal transfer procedure. Interest on bearer debentures is paid to the holder who presents the attached interest coupon. They offer convenience and anonymity to investors but also involve higher risk of loss or misuse due to their bearer nature.