Company Debentures
A debenture is a type of debt instrument that companies issue to raise funds. In exchange for the loan, the company agrees to pay a fixed interest rate to the debenture holder over a specified period. Debentures can refer to both bonds, which are tradable securities, or the formal document representing a medium to long-term loan. They are typically unsecured, meaning they are not backed by collateral. Debenture holders are considered creditors of the company and have a priority claim on assets in case of liquidation, though they usually rank below secured creditors.
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