Explanation

A debenture is a written acknowledgement of a loan to a company. It is a formal document that states the terms of the loan, including the amount borrowed, interest rate, and repayment date.

When a company issues debentures, it is essentially borrowing money from investors. In return, the company provides a certificate (the debenture) that promises to pay interest regularly and repay the principal at a specified future date.

Debentures can be secured (backed by specific company assets) or unsecured (backed only by the company’s general creditworthiness). They are traded on stock exchanges, making them a type of marketable security.

Debt is a general term for money owed. Reserve is accumulated profits set aside. Retained profit is earnings kept in the business rather than distributed. Only debenture specifically refers to a written acknowledgement of a company loan.