Series 7 Exam Question 334: Answer and Explanation

Question: 334

The indenture of a corporate bond includes all of the following EXCEPT

• A. the coupon rate
• B. the credit rating
• C. the name of the trustee
• D. the maturity date

Correct Answer: A

Explanation:

A. The indenture (trust indenture or deed of trust) of a bond is a legal contract between the issuer and the trustee representing the investors. The bond indenture includes the coupon rate (nominal yield), the maturity date, the name of the trustee, collateral that may be backing the bond, and so on. However, the credit rating isn't found on the indenture because that's something that would change if the financial condition of the issuer changes.