The general purpose of protective covenants is to help protect:

Question

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Protective covenants are put in place to protect lenders from company actions that may go against the lenders' benefits. This can include limits on the amount of debt a company can take on, requirements for maintaining certain financial ratios, and restrictions on dividend payments or asset sales. By having these covenants in place, lenders can have some assurance that their investment will be protected from risky company behavior.

The General Purpose of Protective Covenants Is to Help Protect