Which of the following are included in the typical bond indenture?
I.the basic terms of the bond;
II.details of the protective covenants;
III.sinking fund arrangements;
IV.call provisions
A)I only
B)II only
C)II and III only
D)I, II, III, and IV

Question

Quizplus · Accepted Answer

The typical bond indenture includes all of the listed items, namely, the basic terms of the bond, protective covenants, sinking fund arrangements, and call provisions. The basic terms of the bond are the essential components, such as the face value, maturity date, coupon rate, and payment schedule. The protective covenants are provisions that aim to protect the bondholders' interests, such as restrictions on the issuer's actions, reporting requirements, and lender's rights in case of default. The sinking fund arrangements are provisions that require the issuer to set aside funds regularly to retire the bond issue. Lastly, the call provisions specify the issuer's option to redeem the bonds before their maturity, which could be advantageous to the issuer if interest rates decline.

Which of the Following Are Included in the Typical Bond