Which of the following accurately describes a debenture?
A) A type of bond that can be exchanged for a fixed number of shares of the issuing corporation's common stock.
B) A bond with specific assets pledged as collateral.
C) A type of bond which is not collateralized but backed only by the issuer's general credit standing.
D) A type of bond issued in the names and addresses of the bondholders.
E) A type of bond which requires the bond issuer to create a sinking fund of assets set aside at specified amounts and dates to repay the bonds.

Question

Quizplus · Accepted Answer

A debenture is a type of bond which is not collateralized but is backed only by the issuer's general credit standing. This means that in case of default, the bondholders have a claim on the issuer's assets as a whole, rather than on specific assets, as is the case with secured bonds.

Which of the Following Accurately Describes a Debenture