Protection for debt holders takes the form of protective covenants in the bond indenture.These covenants place restrictions on which of the following activities?
A)the sale of assets
B)payment of dividends
C)the issuance of additional debt
D)all of these are typical protective covenants

Question

Quizplus · Accepted Answer

Protective covenants typically restrict the activities mentioned in all of the given choices. These restrictions aim to ensure that the issuer fulfills its obligations towards the bondholders and maintains certain financial ratios and safeguards to protect the value of the bonds.

Protection for Debt Holders Takes the Form of Protective Covenants