Which of the Following Is Not a Common Restrictive Covenant

question 45

Multiple Choice

Which of the following is not a common restrictive covenant included in bond indentures to reduce risk to the investor?

• A)Restrictions on increases in executive salaries
• B)Restrictions on additional borrowing activities
• C)Requirements that the names and addresses of the bondholders be registered with the bond issuer
• D)Limitations on the payment of dividends

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Definitions:

Variable Component

A cost associated with the production of goods or services that varies with the level of output or sales.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to apply manufacturing overhead costs to products by estimating fixed and variable manufacturing overhead costs for the coming period.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual units of production, based on estimated costs.

MH

Often used as an abbreviation for "machine hours," representing the amount of time machines are operated in the production process.