Securities that establish a debtor-creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued is known as ________.

Question

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Fixed income securities, such as bonds or debentures, represent a form of borrowing for corporations. Investors who purchase these securities essentially lend their money to the corporation and receive regular interest payments in return. This establishes a debtor-creditor relationship between the corporation and the investor, as opposed to an ownership relationship, which would be represented by common or preferred stock. Authorized shares refer to the maximum number of shares a corporation is allowed to issue, while common and preferred stock represent ownership in the company.

Securities That Establish a Debtor-Creditor Relationship in Which the Corporation