Which of the Following Statements Is False

question 43

Multiple Choice

Which of the following statements is false?

• A) If the issuer fails to live up to any covenant, the issuer goes into bankruptcy.
• B) The stronger the covenants in the bond contract, the less likely the issuer will default on the bond, and so the lower the interest rate investors will require to buy the bond.
• C) Covenants are restrictive clauses in a bond contract that limit the issuer from taking actions that may undercut its ability to repay the bonds.
• D) Bond agreements often contain covenants that restrict the ability of management to pay dividends.

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Definitions:

Stakeholders

Individuals or groups that have an interest, stake, or investment in the outcomes of a corporation, project, or decision.

Institutionalization

The process by which certain practices or norms become established and accepted as a formal part of a society or organization.

Gatekeepers

Individuals or entities that control access to something, such as information, resources, or decision-making processes, often acting as a filter or checkpoint.

Federal Sentencing Guidelines

Regulations that set forth a uniform sentencing policy for individuals and organizations convicted of felonies and serious misdemeanors in the United States.