CFA Practice Question

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CFA Practice Question

The purpose of a bond's indenture is to ______.
A. set forth in great detail the promises of the issuer and the rights of the bondholders
B. appoint a trustee as a third party to the contract and ensure that the trustee acts in a fiduciary capacity for bondholders
C. ensure that certain activities are carried out by the borrower
Explanation: The bond indenture is the legal contract that describes the form of the bond, the issuer's obligations, and the investor's rights.

User Contributed Comments 3

User Comment
Peter Is it really 'in great detail'?
SKIA yes
Shaan23 I didnt choose that answer because of the great detail fact. The Bond Prospectus goes into great deal and describer the covenants.

Indenture only lists them. I chose C but I really didnt like that answer either but had to choose it.
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