Restrictive Covenants Are Designed So as to Protect Both the Bondholder

question 14

True/False

Restrictive covenants are designed so as to protect both the bondholder and the issuer even though they may constrain the actions of the firm's managers. Such covenants are contained in the bond's indenture.

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Definitions:

FIFO Perpetual

An accounting method where goods are sold based on the order they were purchased or produced; "FIFO" stands for "first in, first out," and "perpetual" means the inventory records are updated continuously.