Which of the Following Are Common Loan Covenants? Assume Each

question 27

Multiple Choice

Which of the following are common loan covenants? Assume each item applies only during the term of the loan. I.Limit on future borrowing
II) Requirement that the borrower maintains a minimum stated level of net working capital
III) Limit on any sales or switches of assets
IV) Limit on the amount of dividends that can be paid

• A)I and IV only
• B)II and III only
• C)I,III,and IV only
• D)I,II,and III only
• E)I,II,III,and IV

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Definitions:

Baby Boomer Generation

The Baby Boomer generation refers to people born during the post-World War II baby boom between 1946 and 1964, known for their significant impact on the economy and culture.

Pension Plan

A retirement plan that requires an employer to contribute to a pool of funds set aside for a worker's future benefit.

Cost-of-Living Adjustment

An increase in income or benefits to match the rise in the cost of living, helping individuals maintain their purchasing power.

Salary

A fixed regular payment, typically paid on a monthly or biweekly basis but often expressed as an annual sum, made by an employer to an employee.