Which of the following is intended to protect creditors by preventing borrowers from pursuing policies that might jeopardize the lenders' funds?
A) factors
B) discounts
C) covenants
D) debts

Question

Quizplus · Accepted Answer

Covenants are agreements made between borrowers and lenders in financing arrangements that typically require borrowers to maintain certain levels of financial performance, such as cash flow or debt ratios. These covenants help to protect creditors by preventing borrowers from engaging in actions that could jeopardize the lenders' funds, such as taking on excessive debt or failing to maintain sufficient levels of liquidity. Factors, discounts, and debts are not directly related to protecting creditors in this manner.

Which of the Following Is Intended to Protect Creditors by Preventing