Question

Which are elements of the indenture? Check all that apply:

a) Principal amount
b) Maturity date
c) Interest rate
d) Stock market index

Answer 1

The elements of the indenture are the face value, maturity date, and coupon rate or interest rate.

Step-by-step explanation:

In financial terms, a bond has several parts. A bond is basically an "I owe you" note that an investor receives in exchange for capital (money). The bond has a face value, which is the amount the borrower agrees to pay the investor at maturity.

The bond also has a maturity date when the borrower will pay back its face value as well as its last interest payment. Lastly, the bond has a coupon rate or interest rate, which is usually semi-annual, but can be paid at different times throughout the year.