The items included in an indenture that limit certain actions of the issuer in order to protect bondholder's interests are referred to as the:

Question

Quizplus · Accepted Answer

Protective covenants are contractual clauses included in bond indentures that protect the interests of bondholders by placing limitations on the actions of the issuer. These limitations may include restrictions on the company's ability to issue additional debt, sell assets, or pay dividends, among other things. The goal of these protective covenants is to ensure that the issuer remains financially stable and able to repay the principal amount and interest on the bonds.

The Items Included in an Indenture That Limit Certain Actions