CFA Level I · CFA Level I Exam · Fixed-Income Instrument Features
A bond's trust deed, which sets out the legal contract between the issuer and bondholders, is most likely to be enforced on behalf of bondholders by the:
The trustee most likely enforces the trust deed. It is a fiduciary appointed to act in bondholders' interests, monitoring the issuer's compliance with the contract and taking action on a breach. Rating agencies only opine on credit quality, and underwriters only help sell the bonds.
- AtrusteeCorrect
- Bcredit rating agency
- Cunderwriting syndicate
Explanation
In many bond markets the indenture or trust deed is overseen by a trustee, a fiduciary who acts for bondholders and monitors and enforces the issuer's compliance. Rating agencies only assess credit risk, and underwriters only help distribute the issue.
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