CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

Which of the following is NOT a duty of a trust company appointed when bonds are issued?

I. Making sure the terms of the indenture are obeyed
II. Managing the sinking fund
III. Deciding when the bonds should be called
IV. Monitoring the protective covenants for the bondholders
V. Representing the bondholders in default
Correct Answer: III only

User Contributed Comments 10

User Comment
chenyx It is iusser decides when the bonds should be called rather than trust company.
quynhnk79 How about II? Does it manage the sinking fund?
Pls help!
saji Yes of course. the trustee manage the sinking fund. Thats one of their functions. That's why it is NOT the answer.
thekapila well sinking fund management could be one of the indenture as you might have answered in question 3-. So trustee will do whatever is in indenture.
ritesh2919 good one
vitbup III. cos they are just representative.
cong Trustees do not dictate the actions of the issuer. That's why III is false.
cmon Yeah!! I got it
gill15 I would not have guess Manage the sinking fund either. I could see the Trustee overseeing the fund and making sures it in good condition.

But managing(being able to decide how to change it) doesnt seem right.

I think managing here just means overseeing it.
AmirSh Trustees act in a fiduciary capacity
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