Debenture:

An unsecured promise to pay, backed only by the general credit of the issuer.  Debentures and corporate bonds carry a written agreement (indenture) that specifies the terms and conditions under which the debentures are written.

When you purchase a debenture, you are literally lending money to the issuer, and must count on the issuer to deliver the return of the invested funds, with or without interest depending on the indenture, as promised.

Convertible debentures can be exchanged for common stock at a set price, such as a certain number of stock shares.

A debenture is only as good as the person who wrote it.  If a debenture is issued by a large corporation, then perhaps it can be converted into stock, depending on the nature of the conditions of the debenture.  A debenture offer must be examined very, very carefully.  All possible research must be conducted on the background and financial history of the issuer.

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The Scam: Swindlers will try to persuade you that enormous amounts of money can be made by trading in debentures.  They will also tell you that by throwing FORFAITING into the mix, some sort of magic is performed and huge profits can be made in a very short period of time.

Yes, it's true that debentures are a popular investment.  What is not true is that you can blithely rely on some unknown creature to buy and sell them for you.  Nor can you get involved in forfaiting (a form of factoring usually only associated with TRADE FINANCE) without a complete understanding of what's involved.

Debentures are a very risky investment, and are only traded by those who have an intimate working knowledge of the debenture market, the different types of debentures available, and how to make an educated guess as to the future value of the debenture.

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