Explanation:
The exception is D.
Collateral trust bonds are secured by financial assets pledged to a trustee. The pledged collateral may include stocks, bonds, notes, and other securities owned by the issuer.
However, bondholders do not automatically get voting rights over pledged common stock merely because it is part of the collateral. Voting rights depend on the specific indenture terms, so this is not generally true.
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Q-1.4. Each of the following is generally true about a collateral trust bond EXCEPT:
A
Collateral trust bond are secured by assets, referred to as collateral, which are pledged to bondholders as security
B
The collateral in a collateral trust bond might include stocks, securities in the issuer’s subsidiary(ies), notes, bonds, or whatever other kinds of obligations owned by the issuer
C
The issuer delivers to a corporate trustee under a bond indenture the securities pledged, and the trustee holds them for the benefit of the bondholders
D
When voting common stocks are included in the collateral, the indenture permits the bondholders to vote the stocks
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