Which of the Following Is a Typical Bond Covenant Restriction

question 9

Multiple Choice

Which of the following is a typical bond covenant restriction on dividends and share repurchases?

• A)Payouts can be made only once existing debt has been paid.
• B)Payouts can be made only if earnings exceed some threshold.
• C)Payouts cannot exceed interest payments to existing bondholders.
• D)Shares can only be repurchased by issuing new debt.
• E)Payouts cannot be made until existing debt is within one year of maturity.

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