certificate of indebtedness

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certificate of indebtedness

A bank issues a certificate of indebtedness to a borrower.

Definition

Noun: A formal, written document that serves as a promise or guarantee to repay a borrowed sum of money, typically including specified terms such as interest and a maturity date. It represents an obligation of the issuer (the debtor) to the holder (the creditor).

Usage

This term is a formal financial and legal term. It is used to describe a specific type of debt instrument. * A certificate of indebtedness is issued by a borrower to a lender as evidence of the debt. * It is a written promise, meaning its terms are legally binding and documented. * The primary purpose is to repay a debt, distinguishing it from equity instruments which represent ownership.

Examples
  • The corporation raised capital by issuing a certificate of indebtedness to private investors.
  • Upon reviewing the certificate of indebtedness, the lawyer confirmed the repayment schedule and interest rate.
  • The government's certificate of indebtedness is considered a very secure investment.
Advanced Usage
  • In historical contexts, certificates of indebtedness were sometimes used by governments to finance wars or large projects.
  • The term can be used more broadly in legal contexts to refer to any documented acknowledgment of a debt, though it is more specific than a simple IOU.
Variants and Related Words
  • Debenture: A type of long-term certificate of indebtedness not secured by physical assets or collateral.
  • Bond: Often used synonymously, though bonds are typically long-term, publicly traded debt instruments.
  • Note (or Promissory Note): A simpler, often shorter-term written promise to repay a debt.
  • IOU: An informal acknowledgment of a debt (an acronym for "I owe you"), which is less formal and legally detailed than a certificate of indebtedness.
Synonyms
  • Debt instrument
  • Promissory note
  • Bond (in a general sense)
  • Debenture
Antonyms
  • Certificate of ownership
  • Equity share
  • Stock certificate
Related Phrases
  • Issue a certificate of indebtedness: The act of creating and selling the debt instrument.
  • Hold a certificate of indebtedness: To be the creditor or owner of the debt promise.
  • Redeem a certificate of indebtedness: To repay the debt as specified, often at maturity.
certificate of indebtedness

A bank issues a certificate of indebtedness to a borrower.

Noun
  1. a written promise to repay a debt

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