Asked by James O'Connor on May 03, 2024
Verified
Which of the following will a bond indenture will not include?
A) Yield to Maturity.
B) Maturity date.
C) Sinking fund provision.
D) Protective covenants.
E) Security or collateral.
Bond Indenture
A legal document specifying the terms and conditions under which a bond is issued.
Sinking Fund
A Sinking Fund is a fund established by an issuer of a bond to repay the principal amount of the bond at maturity, usually by setting aside funds over a period of time.
- Analyze the components of bond agreements, focusing on the role of protective covenants and their consequences for both the entities issuing bonds and those investing in them.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
A
Explanation :
Yield to Maturity (YTM) is not included in a bond indenture because it is a market-driven rate that changes over time, reflecting the current market conditions and the bond's price in the market. The bond indenture typically includes fixed terms of the bond such as the maturity date, sinking fund provisions, protective covenants, and details about any security or collateral backing the bond.
Learning Objectives
- Analyze the components of bond agreements, focusing on the role of protective covenants and their consequences for both the entities issuing bonds and those investing in them.
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