The issuers of bonds do not seek to minimise the strength and number of covenants in a bond agreement because covenants can increase the flexibility of the company issuing the bond.

Question

Quizplus · Accepted Answer

The statement is incorrect. The issuers of bonds may seek to minimise the strength and number of covenants in a bond agreement to increase their flexibility and reduce the restrictions on their activities. However, investors may prefer stronger covenants to protect their interests and ensure the issuer meets its obligations.

The Issuers of Bonds Do Not Seek to Minimise the Strength