Conflicts of interest between a borrowing firm and its creditors.This problem is exacerbated in the case of a public bond, because the ownership of public bonds is generally dispersed among many bondholders.For these reasons, the interests of the investors in a public corporate bond are protected in part by the appointment of a _______, who is charged with monitoring the firm's compliance with the various terms, covenants, and provisions in the contract.

Question

Quizplus · Accepted Answer

The correct answer is trustee. In the context of public corporate bonds, a trustee is appointed to protect the interests of the bondholders by monitoring the firm's compliance with the terms, covenants, and provisions of the bond agreement.

Conflicts of Interest Between a Borrowing Firm and Its Creditors