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Answer: TRSC acts as a fiduciary for the bond investors
## Explanation Based on the provided text about corporate trustees: **Key responsibilities of a corporate trustee:** - Acts as a third party to the contract - Acts in a fiduciary (legal) capacity on behalf of the investors - Represents the bondholders - Ensures the bond issuer complies with the covenants of the indenture **Analysis of options:** - **A. TRSC represents the interests of Banko in the bond indenture** ✗ Incorrect - The trustee represents investors, not the issuer (Banko) - **B. TRSC acts as a fiduciary for the bond investors** ✓ Correct - This directly matches the text stating the trustee "acts in a fiduciary capacity on behalf of the investors" - **C. TRSC's primary responsibility is to ensure regulatory compliance** ✗ Incorrect - While compliance is part of the role, the primary responsibility is to protect bondholders' interests, not just regulatory compliance - **D. TRSC represents the underwriters of the bond issue** ✗ Incorrect - The trustee represents bond investors, not underwriters The correct statement is that TRSC acts as a fiduciary for the bond investors, making option B the correct answer.
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TRSC, a trust company specializing in corporate investments, is brought in as a corporate trustee for a recent bond issue made by Banko, a small investment bank. Which of the following statements about TRSC and its role as a third party to the indenture is correct?
A
TRSC represents the interests of Banko in the bond indenture
B
TRSC acts as a fiduciary for the bond investors
C
TRSC's primary responsibility is to ensure regulatory compliance
D
TRSC represents the underwriters of the bond issue