The Winnipeg Curling Company Currently Has One Issue of Debt

question 46

Multiple Choice

The Winnipeg Curling Company currently has one issue of debt outstanding.Winnipeg Curling has decided to borrow more money by issuing new debt with a higher priority in the event of bankruptcy.This could result in a violation of which type of covenant on the original debt?

• A)Negative pledge
• B)Cross-default clause
• C)The new issue will not violate any covenant as there are never covenants when a firm has only one issue of debt
• D)This type of transaction is illegal

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Definitions:

Unfreezing Process

The initial stage of change in an organization, aiming to dismantle existing mindsets and strategies.

Survival Anxiety

A motivational factor that drives individuals or organizations to change due to the fear of failure or extinction.

Current Behaviours

Observable actions or conduct of individuals in the present, often assessed in organizational contexts for performance evaluations or development planning.

Double-Loop Learning

A learning process where, in addition to making adjustments based on errors, underlying policies and objectives are also questioned and potentially altered.