Why Do the Issuers of Bonds Not Seek to Minimize

question 17

Multiple Choice

Why do the issuers of bonds not seek to minimize the strength and number of covenants in a bond agreement?

• A)Covenants favor the equity holders that managers work for.
• B)Covenants can increase the flexibility of the company issuing the bond.
• C)Covenants lower the interest rate investors will require to buy the bond.
• D)Covenants force the company to renegotiate the terms of the bond if they are broken.

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Definitions:

Anorexia Nervosa

A serious eating disorder characterized by an intense fear of gaining weight, leading to restricted food intake and significant weight loss.

Body Weight

The mass or weight of a person's body, typically measured in kilograms or pounds.

Binge Eating Disorder

A serious eating disorder characterized by recurrent episodes of eating large quantities of food, often quickly and to the point of discomfort, accompanied by a sense of loss of control.

Overweight

A condition where an individual has more body weight than is considered healthy for their height, often assessed by body mass index (BMI).