Final answer:
A debenture offers the advantage of providing an equitable charge over future real property that the borrowing firm may acquire, giving flexibility and security to the lender without the firm needing to offer immediate assets as collateral.
Step-by-step explanation:
One advantage of a debenture is that it provides an equitable charge over future real property acquired by the borrowing firm. This financial vehicle allows the lender to have a claim on assets that may not currently be in the possession of the borrower but will be acquired in the future. When a firm decides on acquiring financial capital, it may consider borrowing from banks, issuing bonds, or issuing stock. A debenture is a type of bond and is an unsecured loan certificate issued by a company, backed by general credit rather than by specified assets. The advantage of a debenture, as opposed to a bank loan or other types of bonds that may provide a charge over assets, is significant. While bank loans may offer prioritized claims on assets or require asset collateralization, and other bonds may also give lenders a fixed charge over specific assets, debentures offer a flexible security interest to future assets that the company may obtain. This means the firm can raise capital without providing immediate collateral but does commit to offering security interests to lenders over future acquisitions.
Furthermore, choosing to issue debentures allows firms to maintain operational control and avoid the potential complexities of being accountable to shareholders, which is the case when issuing stock. Issuing stock means selling ownership and answering to a board of directors and shareholders, adding another layer of consideration in the firm's decisions. In contrast, debentures and bonds pay interest to bondholders without ceding any control of the company.