Which of the Following Is a Typical Bond Covenant Restriction

question 17

Multiple Choice

Which of the following is a typical bond covenant restriction on mergers and acquisitions?

• A)Funding for acquisitions cannot include new debt.
• B)Acquisitions can be made only once existing debt has been paid.
• C)Mergers are allowed only if the combined firm's earnings exceed some threshold.
• D)Mergers are allowed only if the combined firm has a minimum ratio of net tangible assets to debt.
• E)Mergers are allowed only if the combined firm has a lower cost of issuing new debt.

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