Which of the following is not an example of an affirmative (positive)covenant?
A)Requirement to maintain a minimum level of working capital
B)Requirement to furnish bondholders with a copy of the firm's annual accounts
C)Requirement to limit dividends to net income
D)Requirement to maintain a minimum level of net worth

Question

Quizplus · Accepted Answer

Requirement to limit dividends to net income is a negative (or restrictive) covenant because it limits the actions of the issuer. The other options are examples of affirmative covenants because they require the issuer to take certain actions or maintain certain levels.

Which of the Following Is Not an Example of an Affirmative