Biology Forums - Study Force

Financial distress is costly to bondholders. And bondholders often demand various provisions to ensure that managers act in manner that does not transfer wealth from them to the shareholders. Restrictive covenants on debt are one way to prevent this “bondholder wealth expropriation.” Search for bond covenants on the Internet and then answer a couple of questions about them.

Questions to pose:
1.  List some of the more common covenants.

2. What recourse is available to a bondholder if a covenant is violated?

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