Security Provisions and Protective Covenants Are Included in Loan Documents

question 17

Multiple Choice

Security provisions and protective covenants are included in loan documents to increase the likelihood that the interest and principal of outstanding loans will be repaid in a timely fashion. Which of the following is not true about security provisions and protective covenants?

• A) Security features include the assignment of payments due under a specific contract to the lender.
• B) Negative covenants include limits on the amount of dividends that might be paid
• C) Limitations on the amount of working capital that the borrower can maintain.
• D) Periodically, financial statements must be sent to lenders.
• E) Automatic loan repayment acceleration if the borrower is in default on any loans outstanding

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Definitions:

Labour Standards

Predetermined metrics or benchmarks that specify the time required for a worker to complete a specific task under normal working conditions.

Preset Activities

Tasks or actions that are pre-defined and scheduled before a process or event takes place.

Standard Labour

The predetermined amount of time that it is expected to take for a worker to complete a specific task under normal conditions.

Ethical Work Environment

A workplace characterized by ethical practices and policies that promote fairness, respect, and integrity among all employees.