What is the main purpose of restrictive covenants?
A) They protect bondholders by constraining the actions of managers. Such covenants are spelled out in bond indentures.
B) They protect bondholders by expanding the power of managers. Such covenants are spelled out in bond indentures.
C) They protect bond issuers by constraining the actions of managers. Such covenants are spelled out in bond indentures.
D) The bond market from adverse price moves due to inefficient investment decisions of managers and investors.
Correct Answer:
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