What is the term for the conditions lenders place on firms that seek long-term financing?
A)discounts
B)factors
C)debts
D)covenants

Question

Quizplus · Accepted Answer

The term for the conditions lenders place on firms that seek long-term financing is covenants. Covenants are designed to protect lenders from the risk of default on the part of the borrower, by setting restrictions on financial and operating performance. These covenants could include limitations on capital expenditures, debt-to-equity ratios, or minimum levels of cash flow coverage, among others.

What Is the Term for the Conditions Lenders Place on Firms