Which of the following statements regarding the trustee named in a corporate bond indenture is correct?
A. The trustee has the authority to declare a default if the issuer misses a payment
B. The trustee may take action beyond the indenture to protect bondholders
C. The trustee must act at the request of a sufficient number of bondholders
D. The trustee is paid by the bondholders or their representatives
Answer: A
Explanation: According to the Trust Indenture Act. if a corporate issuer fails to pay interest or principal the trustee may declare a default and take such action as may be necessary to protect the rights of bondholders. Trustees can only perform the actions indicated in the indenture, but are typically under no obligation to eXerC1Se the powers granted by the indenture even at the request of bondholders. The trustee is paid by the debt issuer, not by bondholders or their representatives.