Straight debt
A plain debt claim requires the issuer to make the payments specified by its terms and gives the lender creditor rights rather than ordinary ownership rights. Coupon, maturity, security, covenants and repayment structure still need to be examined: the label does not establish one universal payment pattern. Its absence of a conversion feature distinguishes it from convertible debt, although the precise use of straight or plain debt may also exclude other embedded options in a particular comparison. Keep the terminology consistent with the instrument and valuation question.
Worked example
An investor receives annual interest and repayment at maturity under a bond with no conversion right. Its value is assessed from debt cash flows and required yield; the investor cannot demand shares merely because the share price rises.
Common mistake
Assuming every bond is convertible or that straight debt must always be repaid through equal principal instalments.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Supporting | September 2026–June 2027 |