Which type of capital refers to the creditor's right to receive interest?

Loan capital refers to funds that a company raises by taking out loans, typically through bank loans or the issuance of bonds. It represents a liability that must be repaid over time as per agreed terms, and it includes the right of creditors to receive interest on the borrowed amount. This interest is compensation for the risk taken by the lender and provides an incentive for lending the money.

Equity capital, on the other hand, involves funds raised through the sale of shares and does not provide creditors rights to receive fixed interest payments; rather, shareholders might receive dividends contingent on the company's profitability. Preference shares, while they come with fixed dividends, are a form of equity capital and do not represent a creditor relationship in the same way loan capital does. Debt securities, which represent loans made by investors to borrowers at a fixed interest rate, could also imply a creditor's right to receive interest but are not specifically defined as capital when compared to loan capital which is fundamental in understanding creditor relationships.

Thus, loan capital is the most fitting term for the creditor's right to receive interest, as it clearly outlines a direct and contractual obligation for interest payments from the borrower to the lender.