Protective covenants are offered for the benefit of:
A)common shareholders.
B)preferred shareholders.
C)Bondholders.
D)both common and preferred shareholders.

Question

Quizplus · Accepted Answer

Protective covenants in financial agreements are typically offered for the benefit of bondholders. These covenants act as a form of protection for bondholders to ensure that companies maintain certain financial ratios or restrictions on certain activities that may put the bondholders' investments at risk. Common and preferred shareholders do not typically have the same level of protection as bondholders in financial agreements.

Protective Covenants Are Offered for the Benefit Of