Answer Posted / h.r. sreepada bhagi
A type of debt instrument that is not secured by physical
asset or collateral. Debentures are backed only by the
general creditworthiness and reputation of the issuer.
In other words a debenture is a document that either creates
a debt or acknowledges it. The term is used in corporate
finance for a medium to long-term debt instrument used by
large companies to borrow money. In some countries the term
is used interchangeably with bond, loan stock, note, etc.
Debentures are generally freely transferable by the
debenture holder. Debenture holders have no voting rights
and the interest paid to them is a charge against profit in
the company's financial statements.
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