Which two of the following tend to limit the amount of dividends that can be paid by a leveraged corporation?
I.Current tax laws
II.Corporate tax exclusion
III.Bond indenture covenant
IV.State laws pertaining to retained earnings

Question

Quizplus · Accepted Answer

Bond indenture covenants often include restrictions on dividend payments to ensure the company can meet its debt obligations. State laws may also limit dividends to protect creditors by requiring that dividends be paid out of retained earnings.

Which Two of the Following Tend to Limit the Amount