A debenture is defined as:

• A. A secured long-term bond backed by property
• B. A long-term bond not secured by specific property
• C. A short-term note
• D. A bond guaranteed by a third party

Answer: (B)

A debenture is an unsecured long-term debt instrument backed only by the issuer’s creditworthiness, not by specific assets. That’s why the description “a long-term bond not secured by specific property” is the correct fit. Without collateral, debentures rely on the issuer’s promise to pay, which typically warrants a higher risk (and sometimes higher interest) than secured bonds.

By contrast, a bond secured by property is backed by collateral (a secured or mortgage bond), a short-term note is a different, shorter-duration debt instrument, and a bond guaranteed by a third party is defined by the guarantee rather than the absence of collateral.