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Basic Question 6 of 9
Which of the following would not be considered an example of a typical negative covenant of a loan document?
B. The firm may not pledge its assets to another lender.
C. Limitations are put on the amounts of dividends the firm may pay.
D. The firm may not sell or lease its major assets without prior approval by the lender.
E. The firm must furnish periodic financial statements to the lender.
A. The firm may not merge with another firm.
B. The firm may not pledge its assets to another lender.
C. Limitations are put on the amounts of dividends the firm may pay.
D. The firm may not sell or lease its major assets without prior approval by the lender.
E. The firm must furnish periodic financial statements to the lender.
User Contributed Comments 4
| User | Comment |
|---|---|
| Gina | = an affirmative covenant |
| sunilcfa | I thought it was A, B, C and D. The answer none of them :( Oh I made a mistake. The question asks "would not be -ve". Reminded me of a very old principle: Read Question properly. :) |
| saji | I got it right!!! being careful is a big help |
| chesschh | affirmative = must negative= may, restriction |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe the contents of a bond indenture and contrast affirmative and negative covenants
CFA® 2025 Level I Curriculum, Volume 4, Module 1.