A Debt Covenant

question 43

Multiple Choice

A debt covenant

• A)serves to give assurance to a creditor that the debtor will have the ability to pay interest and principal at maturity.
• B)serves to give assurance to the debtor that the interest rate is reasonable.
• C)allows the creditor to become an owner of the company if the covenant is violated.
• D)allows the debtor to forego any interest on the debt.

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