The Parts of an Indenture That Protect the Interests of the Lender

question 19

Multiple Choice

The parts of an indenture that protect the interests of the lender by limiting certain actions that a company might take during the term of the loan are called

• A)deferred call provisions.
• B)sinking funds provisions.
• C)protective covenants.
• D)trustee relationships.
• E)bond ratings.

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Definitions:

Inventory

The total amount of goods or materials held in stock by a business, intended for sale or production.

Average Collection Period

The average amount of time it takes for a business to receive payments owed by its customers for credit sales.

Sales on Account

Transactions where goods or services are sold and payment is deferred to a future date, typically recorded as accounts receivable.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered or used but not yet paid for.