A borrower agreeing to not pay dividends if the interest coverage ratio is below 2.0 is an example of a positive covenant.

Name: A borrower agreeing to not pay dividends if the interest coverage ratio is below 2.0 is an example of a positive covenant.
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This is an example of a negative covenant, as it restricts the borrower from performing certain actions (paying dividends) under specified financial conditions. Positive covenants are promises to do something, such as maintain certain financial ratios.

A Borrower Agreeing to Not Pay Dividends If the Interest