Why Do Bonds Often Include Covenants

question 59

Multiple Choice

Why do bonds often include covenants?

• A)To reduce information asymmetry.
• B)To reduce moral hazard.
• C)To compensate for value-added services.
• D)To ensure repayment of the bond.

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Definitions:

Irritation/Anger

Emotional responses typically characterized by annoyance or frustration, which can escalate to anger if not managed.

Small Victories

Achieving short-term, manageable goals that contribute to long-term objectives and boost morale among team members.

Power Distance

A cultural dimension that describes how power is distributed and the extent to which the less powerful accept and expect that power is distributed unequally.

Uncertainty Avoidance

The extent to which individuals or cultures are uncomfortable with ambiguity and strive to minimize uncertainty through strict rules and rituals.