A ________ is a provision that restricts or specifies certain activities that a borrower can engage in.
A)residual claimant
B)risk hedge
C)restrictive barrier
D)restrictive covenant

Question

Quizplus · Accepted Answer

A restrictive covenant is a provision in a loan agreement that specifies certain activities that a borrower can or cannot engage in, such as limiting the borrower's ability to take on additional debt, sell assets, pay dividends, or engage in other high-risk activities. The purpose of a restrictive covenant is to protect the lender's interests and reduce the borrower's risk of default.

A ________ Is a Provision That Restricts or Specifies Certain