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:

Complex Phenomena

Events or situations that are multifaceted and difficult to understand due to the involvement of multiple interconnected factors.

Natural Scientists

Professionals who study the natural world using empirical evidence and scientific methods.

Gravity

A natural force exerted by a mass that attracts other masses towards its center.

Evolution

The process by which different kinds of living organisms are thought to have developed and diversified from earlier forms during the history of the earth.