What term describes the legal conditions associated with bonds?

The bond indenture is the term that accurately reflects the legal conditions associated with bonds. A bond indenture is a formal contract between the bond issuer and the bondholders that outlines the specific terms of the bond, including the interest rate, maturity date, payment schedule, and any covenants that the issuer must adhere to. This document serves to protect the interests of bondholders, ensuring they are aware of their rights and obligations as well as the obligations of the issuer.

In contrast, a trust indenture generally refers to a similar type of contract but is specifically used in the context of a bond that is secured by collateral. While it may include similar elements to a bond indenture, it’s less commonly used in the context of all types of bonds.

The term bond agreement might suggest a similar contract but lacks the formal specificity and legal standing associated with indentures, making it an imprecise term for this context. A security agreement typically pertains to loans secured by collateral rather than the specific terms and conditions of bond issuances, confirming that it is also not the right term in this scenario. Hence, the bond indenture is the most fitting choice to describe the legal conditions surrounding bonds.