Which of the Following Would Be Considered a "Negative" Loan

question 22

Multiple Choice

Which of the following would be considered a "negative" loan covenant?

• A) The firm's current ratio cannot fall below 2.0
• B) All property must be maintained in good condition
• C) The firm's net worth must exceed $10,000,000
• D) The firm must carry property insurance on all collateral.
• E) Cash dividends cannot exceed 50% of earnings.

---

Definitions:

Financial Planning

The process of setting goals, developing strategies, and outlining financial activities to manage money and achieve financial objectives.

Linkages

This term refers to connections or relationships between different sectors or elements within an economy or between different economies.

Aggregation

The process by which smaller investment proposals of each of a firm’s operational units are added up and treated as one big project.

Investment Requirement

The minimum amount of money needed to invest in a particular venture, fund, or project.