Protective Covenants

question 33

Multiple Choice

Protective covenants:

• A) apply to short-term debt issues but not to long-term debt issues.
• B) only apply to privately issued bonds.
• C) are a feature found only in government-issued bond indentures.
• D) only apply to bonds that have a deferred call provision.
• E) are primarily designed to protect bondholders.

---

Definitions:

Payroll Tax

Taxes imposed on employers and employees, based on the wages and salaries paid to workers, used to fund social security and other government programs.

Great Recession

A profound global economic downturn that began in 2007 and lasted until 2009, marked by significant declines in economic activity worldwide.

Social Security Taxes

Social Security taxes are taxes collected from employees and employers to fund the Social Security program, providing retirement, disability, and survivors' benefits.

Government Expenditures

The total amount of spending by the government, including on services, infrastructure, and social welfare programs.