CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

What covenants are most likely in an issuer's bank credit agreements?
A. Restricted payments
B. Limitations on additional indebtedness
C. Maintenance covenants
Explanation: Banks often require high-yield issuers to maintain certain financial standards. These can include various metrics such as:

- Total debt / EBIT cannot exceed 2x
- Senior debt / EBITDA must be less than 3x
- EBITDA / Interest expense cannot fall below 3x

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