Which of the following most accurately describes a debenture?
A) It is a contract in which a lender provides finance to a firm in return for promises of interest payment and capital repayment at maturity. The debenture can be unsecured.
B) It is a bond which entitles the owner to receive a share of the firm's assets in a liquidation.
C) It is a financial asset with a right to receive interest and a share of a firm's profits.
D) It is a long- term contract in which the debenture holder lends money to a company in return for promises of interest payments and capital repayment at maturity. The debenture is secured by either a fixed or a floating charge against the firm's assets.
Correct Answer:
Verified
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