Protective Rights Include

question 13

Multiple Choice

Protective rights include:

• A) a lender's right to restrict a borrower from undertaking activities that could significantly change the credit risk of the borrower to the detriment of the lender.
• B) the right of a party holding a non-controlling interest in an investee to approve capital expenditure greater than that required in the ordinary course of business, or to approve the issue of equity or debt instruments.
• C) the right of a lender to seize the assets of a borrower if the borrower fails to meet specified loan repayment conditions.
• D) all of the options are correct.

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Definitions:

Operating Activities

Operating activities involve the day-to-day functions of a business related to producing and selling its goods or services, reflected in the cash flows from operating activities in financial statements.

Investing Activities

Financial transactions involving the acquisition or disposal of long-term assets and investments not related to the company's primary business operations.

Financing Activities

Transactions related to raising capital or repaying investors, such as issuing stocks or bonds and repaying bank loans.

Going Concern

The assumption that a company will continue its operations in the foreseeable future and has no intention of liquidating its assets.