What is a legal agreement, also called the deed of trust, between the corporation issuing bonds...

Question:

What is a legal agreement, also called the deed of trust, between the corporation issuing bonds and the bondholders that establish the terms of the bond issue?

A. Indenture

B. Debenture

C. Bond

D. Bond trustee

Bond Deed:

A bond deed ( not commonly known as such) is a contract that includes the agreement between the parties i.e. the issuer and the buyer. It includes cash flows, par value, coupon, time, other conditions, etc.

Answer and Explanation:

What is a legal agreement, also called the deed of trust, between the corporation issuing bonds and the bondholders that establish the terms of the bond issue?

A. Indenture

The indenture is the contract between the investor and the issuer. It contains the specific condition of the contract.


Let's analyze other options:

B. Debenture - Debenture is a bond that is not backed by an asset.

C. Bond - A bond is a debt security.

D. Bond trustee - Trustee is the person/entity who enforces the terms of the bond on the issuer on the behalf of the investor.


Learn more about this topic:

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Long-Term Debt: Definition, Cost & Formula

from Financial Accounting: Help and Review

Chapter 8 / Lesson 7
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