A ________ Is a Provision That Restricts or Specifies Certain

question 41

Multiple Choice

A ________ is a provision that restricts or specifies certain activities that a borrower can engage in.

• A)residual claimant
• B)risk hedge
• C)restrictive barrier
• D)restrictive covenant

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Definitions:

Standby Underwriting

A commitment by an underwriter to purchase any unsold shares during an offering, ensuring that the issuing company raises the full amount of capital.

Best Efforts

A contractual clause requiring one party to exert all reasonable attempts to fulfill the terms of the agreement.

Preemptive Rights

The rights that allow existing shareholders to purchase new shares in a company before the company offers them to the public, to maintain their proportionate ownership.

Standby Underwriting

An arrangement in which an underwriter agrees to buy any unsold shares after a public offering, ensuring the issuer sells all shares but only if necessary.