As a Firm Increases Its Use of Debt,bondholders Will

question 27

Multiple Choice

As a firm increases its use of debt,bondholders will

• A) force managers to accept protective covenants.
• B) monitor managers less.
• C) accept a lower interest rate on their bonds.
• D) discourage managers from pursuing risky projects.
• E) be indifferent about firm risk.

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Definitions:

Girdles

Structures that connect the limbs to the axial skeleton, including the pelvic girdle and shoulder girdle.

Rib Cage

The set of bones surrounding the chest that protects the heart and lungs.

Orbit

The bony cavity containing the eye, or alternatively, the path one object in space takes around another due to gravity.

Maxilla

The upper jawbone in most vertebrates, forming part of the skull and housing the upper teeth.