In general, with regard to dividend payments, the contractual constraints imposed by loan agreements can include all of the following EXCEPT
A) limiting the percentage of earnings that can be paid out in dividends.
B) requiring the payment of a common stock dividend.
C) prohibiting the payment of cash dividends until a certain level of earnings has been achieved.
D) limiting the actual dollar amount of dividends that can be paid out.

Question

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Loan agreements typically place constraints on dividend payments to protect the lenders' interests. However, requiring the payment of a common stock dividend is not a common contractual constraint. The other options are commonly imposed constraints.

In General, with Regard to Dividend Payments, the Contractual Constraints