An Example of a Negative Covenant That Might Be Found

An example of a negative covenant that might be found in a bond indenture is a statement that the company:

A) shall maintain a current ratio of 1.1 or higher.
B) cannot lease any major assets without bondholder approval.
C) must maintain the loan collateral in good working order.
D) shall provide audited financial statements in a timely manner.
E) shall maintain a cash surplus of $100,000 at all times.

Correct Answer:

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