what are debentures are they good or bad how they work and what does it mean?
In: Economics
You may need to specific if you are asking about it in the North American context or the British one.
A British debenture is another word for a bond. A loan secured by some sort of asset issued by a company.
A North American debenture is (at its core) a long term loan that is not secured by anything. That means that there is nothing the borrower is putting up in exchange for the money. The loan is purely made on the basis of the credit worthiness of the company.
So are they good or bad? I’m not sure there is really a straightforward answer to that. They exist because sometimes a company needs to borrow money and (at least in North America) doesn’t have enough assets to put up as collateral against the loan. So I guess they probably *should* exist.
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