Operating and Financial Constraints Placed on a Corporation by Loan

question 39

Multiple Choice

Operating and financial constraints placed on a corporation by loan provisions are

• A) agency costs to the firm.
• B) necessary to control the risk of the firm.
• C) agency costs to the lender.
• D) interest rate costs to the firm.

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Definitions:

Financial Reporting

The method of generating reports that reveal a company's financial condition to its management, investors, and governmental bodies.

Civil Law

A legal system based on written codes and statutes, in contrast to common law, which is based on judicial decisions.

McCarran-Ferguson Act

A United States federal law that exempts insurance businesses from most federal regulation, allowing states to regulate the insurance industry.

Antitrust Legislation

Laws designed to promote fair competition and prevent monopolies, conspiracies, and other situations that restrain trade.