An Example of a Negative Covenant That Might Be Found

question 20

Multiple Choice

An example of a negative covenant that might be found in a bond indenture is a statement that the company:

• A) shall maintain a current ratio of 1.1 or higher.
• B) cannot lease any major assets without bondholder approval.
• C) must maintain the loan collateral in good working order.
• D) shall provide audited financial statements in a timely manner.
• E) shall maintain a cash surplus of $100,000 at all times.

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Definitions:

Teleological Ethics

Ethics that are value based.

Objective Rules

Standards or principles that are based on facts and are impartial, ensuring equal treatment and fairness.

Normative Ethics

A branch of ethics concerned with establishing how things should or ought to be, focusing on the criteria of what is morally right and wrong.

PR Practitioners

Professionals who specialize in managing the public image and communication strategies of individuals, organizations, or companies.