Answer-first summary for fast verification
Answer: a) The trustee is paid by bondholders
**Correct answer: A** The corporate trustee is generally **paid by the issuer**, not directly by bondholders. Why the others are true: - **B**: Correct — the trustee acts in a fiduciary capacity for bondholders. - **C**: Correct — the trustee authenticates bonds and ensures issuance does not exceed authorization. - **D**: Correct — the trustee may declare default and protect bondholders’ rights if the issuer fails to pay. Thus, the exception is **A**.
Author: Manit Arora
Ultimate access to all questions.
A
a) The trustee is paid by bondholders
B
b) The trustee acts in a fiduciary capacity for investors who own the bond issue
C
c) The trustee must, at the time of issue, authenticate the bonds issued (i.e., keep track of all the bonds sold) and make sure that they do not exceed the principal amount authorized by the indenture
D
d) If a corporate issuer fails to pay interest or principal, the trustee may declare a default and take such action as may be necessary to protect the rights of bondholders
No comments yet.