Which of the following statements relating to debt covenants is in?
A)covenants are written into loan contracts.
B)covenants restrict a company's activities.
C)if a company breaches a debt covenant it will not need to renegotiate or repay the loan.
D)companies enter into debt covenants with banks when they borrow a significant amount.

Question

Quizplus · Accepted Answer

If a company breaches a debt covenant, it typically needs to renegotiate the terms or repay the loan, contrary to what option C suggests.

Which of the Following Statements Relating to Debt Covenants Is