Typical debt covenants would
I. Limit the issuance of additional debt senior to the obligation
II. Specify minimum levels of selected financial ratios
III. Specify minimum levels of earnings coverage
IV. Prohibit excessive dividends or stock repurchases
A) II and III
B) II and IV
C) I, III and IV
D) I, II, III and IV

Question

Quizplus · Accepted Answer

Debt covenants often include all these provisions to protect the interests of lenders by limiting additional senior debt, ensuring financial stability through financial ratios and earnings coverage, and restricting excessive payouts to shareholders.

Typical Debt Covenants Would