In relation to a company’s securities, explain the term “debenture”. (4 Marks)

A debenture is a long-term security issued by a company, typically bearing a fixed rate of interest, and secured against the company’s assets. It is a type of loan that allows the company to raise capital without surrendering ownership or control. The holders of debentures are creditors to the company and are entitled to repayment of the loan plus interest at an agreed rate.