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Basic Question 6 of 20
Bond covenants are typically described in the ______.
B. bond debenture
C. bond prospectus
A. bond indenture
B. bond debenture
C. bond prospectus
User Contributed Comments 5
| User | Comment |
|---|---|
| geofin | WTF? Bond indenture (also trust indenture or deed of trust) is a legal document issued to lenders and describes key terms such as the interest rate, maturity date, convertibility, pledge, promises, representations, covenants, and other terms of the bond offering. (Wikipedia) |
| johntan1979 | Prospectus describes; Indenture lists. This is actually in reading "Overview of Bond Sectors and Instruments". |
| HolzGe1 | got me :D |
| ascruggs92 | geofin, a bond indenture and bond debenture are the same thing, the only difference being that indentures are collateralized and debentures are not. The definition you provided is of the legal document held by each party in the transaction after terms have been established and signed on. The prospectus is where potential investors can find the terms of the bond. |
| khalifa92 | @ascruggs92: I thank you on behalf of everyone benefitted (past, present & future) from you comment, nicely explained. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe credit risk and its components, probability of default and loss given default
CFA® 2025 Level I Curriculum, Volume 4, Module 14.