The written agreement between a corporation and its bondholders might contain a prohibition against paying dividends in excess of current earnings. This prohibition is an example of a(n):

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A restrictive covenant is a contractual agreement between a borrower and a lender that limits the actions of the borrower, such as restricting dividend payments in excess of current earnings. The purpose of the restrictive covenant is to protect the lender's investment and ensure that the borrower continues to meet their financial obligations. In this case, the prohibition on paying dividends in excess of current earnings is a type of restrictive covenant.

The Written Agreement Between a Corporation and Its Bondholders Might