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valputin valputin
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8 years ago
Although restrictive covenants can potentially reduce moral hazard, a problem with restrictive covenants is that
A) they are inexpensive to monitor and enforce.
B) too many resources may be devoted to monitoring and enforcing them, as debtholders duplicate others' monitoring and enforcement efforts.
C) borrowers may find loopholes that make the covenants ineffective.
D) they reduce the value of the debt contract.
Textbook 
The Economics of Money, Banking and Financial Markets, Business School Edition

The Economics of Money, Banking and Financial Markets, Business School Edition


Edition: 4th
Author:
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Our course uses > The Economics of Money, Banking and Financial Markets
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MeelaMeela
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8 years ago
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valputin Author
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#2
8 years ago
Correct
Our course uses > The Economics of Money, Banking and Financial Markets
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#3
8 years ago
@valputin,

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