A liability where the borrowings are from many investors, representing a written promise to pay a principal amount at a specific time, as well as interest on the principal at a specific rate per period, is known as:

Question

Quizplus · Accepted Answer

A debenture is a type of debt instrument that is not secured by specific collateral or assets. It represents a written promise to pay back the borrowed funds, along with interest, to many investors. Therefore, option A is the correct answer. Defeasance (option B) refers to an arrangement where a borrower sets up a trust to ensure that enough funds are available to repay the debt, while collateral (option C) is a property or asset that is pledged to secure a loan. A sinking fund (option D) is a reserve account set up by a company to ensure that funds are available to pay off a bond issue at maturity.

A Liability Where the Borrowings Are from Many Investors, Representing