Which of the Following Is an Example of a Positive

question 177

Multiple Choice

Which of the following is an example of a positive covenant?

• A) The firm must limit the amount of dividends it pays according to some formula.
• B) The firm cannot pledge any assets to other lenders.
• C) The firm cannot merge with another firm.
• D) The firm cannot sell or lease any major assets without approval by the lender.
• E) The company must maintain its working capital at or above some specified minimum level.

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Definitions:

Constitution

The system of fundamental laws and principles that outlines the structure and powers of a government and the rights of its people, serving as the supreme legal authority.

Representative Democracy

A form of government where citizens elect officials to represent them in legislative and policy-making responsibilities.

Popular Sovereignty

The concept that the legitimacy and rule of a government is grounded in and maintained by the agreement of the population, through representatives they elect.

Federalists

Members or supporters of the first American political party, which favored a strong central government and the ratification of the U.S. Constitution.