A Common Protective Provision in a Bond Indenture Is the Limitation

question 49

True/False

A common protective provision in a bond indenture is the limitation of dividends on the issuing firm's common stock.

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Definitions:

Contingent Liability

A future financial liability that might occur based on the result of a particular event.

Contingent Liability

A potential financial obligation that may arise in the future, depending on the outcome of a specific event.

Future Event

A possible occurrence that may happen in the future, impacting strategies or decisions in various contexts.

Times Interest Earned

A financial ratio that measures a company's ability to cover its interest expenses on outstanding debt with its before-tax earnings, also known as the interest coverage ratio.