Holders of debentures are primarily what type of claim against a company?

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Prepare for the TExES Business and Finance 276 Test. Study with flashcards and multiple choice questions, each with hints and explanations. Get ready for your exam!

Multiple Choice

Holders of debentures are primarily what type of claim against a company?

Explanation:
Debentures represent a form of long‑term debt issued by a company, so the holders are creditors who are entitled to repayment of the principal and periodic interest. They are not owners of the company, not patent holders, and not customers with payable rights. Because debenture holders provide loans, their position is a creditor’s claim against the company, and in liquidation they rank ahead of shareholders but behind secured creditors.

Debentures represent a form of long‑term debt issued by a company, so the holders are creditors who are entitled to repayment of the principal and periodic interest. They are not owners of the company, not patent holders, and not customers with payable rights. Because debenture holders provide loans, their position is a creditor’s claim against the company, and in liquidation they rank ahead of shareholders but behind secured creditors.

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