Which of the Following Statements Is FALSE

question 36

Multiple Choice

Which of the following statements is FALSE?

• A)By including more covenants,issuers increase their costs of borrowing.
• B)Once bonds are issued,equity holders have an incentive to increase dividends at the expense of debt holders.
• C)Covenants may restrict the level of further indebtedness and specify that the issuer must maintain a minimum amount of working capital.
• D)If the covenants are designed to reduce agency costs by restricting management's ability to take negative NPV actions that exploit debt holders,then the reduction in the firm's borrowing cost can more than outweigh the cost of the loss of flexibility associated with covenants.

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Definitions:

Glycine

The simplest amino acid, used in the body for the synthesis of proteins.

Gly

Glycine, the simplest amino acid, with the chemical formula NH2CH2COOH.

Glycine

The simplest amino acid, with the chemical formula NH2CH2COOH, involved in protein synthesis.

Lys

Short for Lysine, an essential amino acid important for protein synthesis and various metabolic processes in the body.