17) Miller Farm Products is issuing a 15-year, unsecured bond. Based on this information, you know that this debt can be described as a:
A) note.
B) bearer form bond.
C) debenture.
D) registered form bond.
E) call protected bond.
Homework Answers
A company issuing long term unsecured debt is an example of a debenture.
Debentures by definition are long-term bonds (debt) issued by a company, which is not backed by a collateral or pledge of assets. It is rather backed by company's reputation and good faith.
Since the debt is unsecured, means it is not backed by any pledge and is issued by a company, therefore, we classify it as debenture.
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