Which of the Following Are Negative Protective Covenants That Can

question 53

Multiple Choice

Which of the following are negative protective covenants that can be found in a bond indenture?
I. Bond proceeds must be used to finance fixed assets
II. Bonds with senior status cannot be issued while this bond issue is outstanding
III. The issuer is prohibited from guaranteeing debt of another firm
IV. The issuer must furnish audited financial statements on an annual basis

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

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Definitions:

Trade Balance

The financial discrepancy between exports and imports in a country's trade of goods and services.

Net Capital Outflow

Refers to the difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreigners. It's a measure of the international financial flow from a country.

Foreign Assets

Investments or interests in property, businesses, and financial products located in countries other than the investor's home country.

Net Capital Outflow

The difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreigners over a certain period.