All of the Following Are Examples of Restrictive Debt Covenants

question 12

Multiple Choice

All of the following are examples of restrictive debt covenants EXCEPT

• A) a prohibition on selling accounts receivable.
• B) supplying the creditor with audited financial statements.
• C) a prohibition on entering certain types of lease arrangements.
• D) a constraint on subsequent borrowing.

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Definitions:

$M

A shorthand notation for million dollars, used mainly in financial contexts to denote monetary values.

Interest Rate

The percentage charged on borrowed money, reflecting the cost of borrowing or the gain from saving.

Capital Projects

Large-scale investment projects that require significant amounts of capital, typically in infrastructure, buildings, or technology, aiming for long-term benefits.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounting to address the time value of money.