Final answer:
A debenture is the correct answer to the student's question; it is an unsecured long-term debt instrument based on the issuing corporation's credit standing. Option C is correct.
Step-by-step explanation:
A debenture is a long-term unsecured debt instrument that is based on a corporation's general credit standing. The correct answer to the student's question is c) Debenture. Unlike bonds backed by specific assets, a debenture is backed only by the general creditworthiness and reputation of the issuer.
A corporate bond can come in various forms, including secured bonds, which are backed by collateral, and unsecured bonds, such as debentures, that are not backed by specific assets for security. When a firm needs to raise capital, it might issue a corporate bond or a debenture. The terms of the bond or debenture will specify the borrowed amount, the interest rate that will be paid to investors, and the time until repayment.