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

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Preparation for the TExES Business and Finance 276 Test with informative questions and answers. Master concepts with explanations and practice quizzes tailored for success in the 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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