Typical Debt Covenants Would

question 12

Multiple Choice

Typical debt covenants would
I. Limit the issuance of additional debt senior to the obligation
II. Specify minimum levels of selected financial ratios
III. Specify minimum levels of earnings coverage
IV. Prohibit excessive dividends or stock repurchases

• A) II and III
• B) II and IV
• C) I, III and IV
• D) I, II, III and IV

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Definitions:

Marginal Utility

The additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service.

Pretzels

A type of baked pastry made from dough that is commonly shaped into a knot and typically salted.

Utils

A hypothetical unit of measurement used in economics to quantify the level of utility or satisfaction gained from consuming goods and services.

Sensitivity

The degree to which something is affected by changes in external factors, often used in contexts like financial analyses, project planning, or scientific measurements.