What best describes perpetual debt?

Perpetual debt is best described as debt that does not have a specified maturity date, meaning it is intended to exist indefinitely. Instead of requiring the principal to be repaid at a particular point in time, perpetual debt requires the issuer to make regular interest payments indefinitely. This characteristic allows perpetual debt to serve as a long-term financing option for companies, as it provides them access to funds without the pressure of repaying the principal within a set term. Investors receive interest payments, often referred to as dividends, for as long as they hold the debt, which can make this form of debt attractive in certain market conditions.

The other options do not accurately capture the essence of perpetual debt. Debt with periodic maturity implies that there is a defined term for repayment, which does not align with the indefinite nature of perpetual debt. Short-term debt instruments are designed to be paid back within a year or so, contrasting the long-term perspective of perpetual debt. Lastly, debt redeemable at will suggests that the borrower can repay the principal at any time, which also does not reflect the nature of perpetual debt, since it is not designed to be redeemed but rather to remain outstanding indefinitely.