Bonds and debentures are both types of debt instruments that can be issued by corporations or

governments to raise capital. However, they differ in the way they are secured. Bonds are backed by

the specific assets of the issuer, such as property, equipment, or inventory. This means that if the

issuer defaults on the bond payments, the bondholders have a claim on those assets and can sell

them to recover their money. Debentures, on the other hand, are not secured by any real assets or

collateral. They are only backed by the general creditworthiness and reputation of the issuer. This

means that if the issuer defaults on the debenture payments, the debenture holders have no

recourse to any specific assets and have to rely on the issuer’s ability to pay from its future earnings

or liquidation proceeds.

Canadian Investment Funds Course, Unit 5, Section 5.1