The TRC Company is required by its bank to pay no dividend over $3 per share.What is this restraint known as?
A)An affirmative covenant
B)A negative covenant
C)A special covenant
D)A horizontal covenant
E)None of the options is correct

Question

Quizplus · Accepted Answer

This restraint is known as a negative covenant, which limits the actions that the company can take. In this case, it restricts the company from paying more than $3 per share in dividends.

The TRC Company Is Required by Its Bank to Pay