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Debenture

A type of long term bond (loan), taken out by a company, which it agrees to repay by a specified future date. The company will usually pay a fixed rate of interest to debenture holders each year until maturity. If the borrowing company defaults on either the interest or the principal amount of the loan by the agreed date, the debenture holders can force the company into liquidation and recover their money from a sale of its assets.