The parts of an indenture that protect the interests of the lender by limiting certain actions that a company might take during the term of the loan are called

Question

Quizplus · Accepted Answer

Protective covenants are clauses in an indenture that are designed to protect the lender's interests by limiting the actions of the borrower. These covenants may include restrictions on the borrower's ability to take on new debt, sell assets, or pay dividends, among other things. The purpose of these covenants is to ensure that the borrower remains financially stable and is able to repay the loan according to the agreed-upon terms.

The Parts of an Indenture That Protect the Interests of the Lender