Which of the Following Statements Is False

question 33

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 be to 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:

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow in his 1943 paper "A Theory of Human Motivation," which outlines a five-tier model of human needs, arranged in a hierarchy from basic (physiological) to more complex (self-actualization) needs.

Physiological Need

Fundamental requirements necessary for maintaining life and physical health, such as food, water, air, and shelter.

Leg Wound

An injury or open sore on the leg, which could result from accidents, surgeries, or medical conditions, requiring proper care and treatment.

Social Identity

An individual's sense of who they are based on their group memberships, such as nationality, ethnicity, or religion.