Which of the Following Is a Typical Bond Covenant Restriction

question 9

Multiple Choice

Which of the following is a typical bond covenant restriction on dividends and share repurchases?

• A)Payouts can be made only once existing debt has been paid.
• B)Payouts can be made only if earnings exceed some threshold.
• C)Payouts cannot exceed interest payments to existing bondholders.
• D)Shares can only be repurchased by issuing new debt.
• E)Payouts cannot be made until existing debt is within one year of maturity.

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Definitions:

Environmental Uncertainty

The degree to which an organization lacks information about its external environment, making it difficult to predict future trends or events.

Systems Design

Refers to the process of defining the architecture, components, modules, interfaces, and data for a system to satisfy specified requirements.

Organic Designs

Describes an organizational structure that is more flexible and adaptable, typically characterized by loose, informal communication and decentralized decision making.

Span of Control

The number of subordinates or direct reports that a manager or supervisor can effectively oversee.