Borrowers' agreement to debt covenants lowers their cost of borrowing.

Name: Borrowers' agreement to debt covenants lowers their cost of borrowing.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Debt covenants provide lenders with a level of protection by ensuring that borrowers maintain certain financial conditions or follow specific guidelines, which reduces the risk for the lender. This decreased risk often results in lower interest rates for the borrower, thus lowering their cost of borrowing.

Borrowers' Agreement to Debt Covenants Lowers Their Cost of Borrowing