As a firm increases its use of debt,bondholders will
A) force managers to accept protective covenants.
B) monitor managers less.
C) accept a lower interest rate on their bonds.
D) discourage managers from pursuing risky projects.
E) be indifferent about firm risk.

Question

Quizplus · Accepted Answer

Lenders include covenants in their loans in order to limit the ability of mangers to select long shot projects.

As a Firm Increases Its Use of Debt,bondholders Will