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Which One of the Following Is a Positive Protective Covenant

Question 48

Multiple Choice

Which one of the following is a positive protective covenant that might be found in a bond indenture?


A) The firm must not issue bonds that are senior to those currently outstanding.
B) The firm must avoid purchasing bonds issued by other corporations.
C) The firm must maintain the good condition of all pledged assets.
D) The firm must avoid issuing new bonds with a lower coupon to refund outstanding bonds.
E) The firm must not pay dividends in excess of that allowed by the specified formula.

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