What do Debentures typically entail as a form of long-term debt?

Debentures typically entail fixed interest rates over a specified duration, making this the correct choice. This characteristic means that once a company issues a debenture, it agrees to pay a specified interest rate at regular intervals (usually semi-annually or annually) until the maturity date. At that point, the face value of the debenture is returned to the investor. This predictability of payments is what appeals to many investors looking for a stable income stream.

The fixed nature of these interest payments contrasts with variable interest rates, which can fluctuate over time and create uncertainty for both borrowers and lenders. Additionally, debentures do have defined payment terms that outline the total duration of the investment, typically ranging from several years to decades, rather than having no fixed payment terms. Lastly, while some debentures may be secured by physical assets, many are unsecured, relying instead on the general creditworthiness of the issuer. This indicates there are different types of debentures, but the typical structure is more centered around their fixed interest rate feature.