Which of the Following Is NOT a Duty of a Trust

question 310

Multiple Choice

Which of the following is NOT a duty of a trust company appointed when bonds are issued?

• A) Make sure terms of the indenture are obeyed.
• B) Manage the sinking fund.
• C) Decide when the bonds should be called.
• D) Monitor the protective covenants for the bondholders.
• E) Represent the bondholders in default.

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Definitions:

Debt Flotation Costs

Fees and expenses incurred by an issuer of debt when offering new securities to investors.

Capital Structure

The mix of various forms of capital used by a company, including debt and equity, to finance its operations.

Equity

Represents the value that would be returned to a company's shareholders if all of the assets were liquidated and all of the company's debts were paid off.

Refunding Investment Outlay

The process of reallocating or investing capital in new assets or projects with the intention of generating returns or benefits that exceed the initial costs.