by the borrower's integrity, e.g. an unsecured bond. A debenture is documented in an indenture. Debenture bond An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond and collateral trust bonds. Debenture stock A type of stock that makes fixed payments at scheduled intervals of time. Debenture stock differs from a debenture in that it has the status of equity, not debt, in liquidation. Debit An expense, or money paid out from an account. A debit transaction is one which the net cost is greater than the net sale proceeds. See also Credit. Debit balance The amount that is owed to a broker by a margin customer for loans the customer uses to buysecurities. Debit card A card that resembles a credit card but which debits a transaction account (checking account) with the transfers occurring contemporaneously with the customer's purchases. A debit card may be machine readable, allowing for the activation of an automated teller machine or other automated payments equipment. Debit spread Applies to derivative products. Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a "debit spread." Antithesis of a credit spread. Debt Money borrowed. Debt bomb A default on debt and obligations by a major financial_institution that disrupts the stability of the economic system. Debt capacity Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases. Debt ceiling See: Debt limit Debt displacement The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity. Debt/equity ratio Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity. Debt-for-equity swap A swap agreement to exchange equity/returns for debt returns or the converse over a prearranged length of time. Debt instrument An asset requiring fixed dollar payments, such as a government or corporate bond. Debt leverage Amplification of the return earned on equity when an investment or firm is financed partially with borrowedmoney. Debt limit The maximum amount that a municipality can borrow. Debt limitation A bond covenant that restricts the firm's ability to incur additional indebtedness in some way. Debt market The market for tradingdebt instruments. Debt outstanding subject to limitation Obligations incurred by the Treasury subject to the statutory limit set by Congress. Until World War 1, a specific amount of debt was authorized for each separate security issue. Beginning with the Second Liberty Loan Act of 1917, the nature of the limitation was modified until, in 1941, it developed into an overall limit on the outstanding Federal debt. The statuatory limit may change from year to year. Debt ratio Total debt divided by total assets. Debt relief Reducing the principal and/or interest payments on Less developed country loans. Debt retirement The complete repayment of debt. See: Sinking fund. Debt securities IOUs created through loan-type