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Although restrictive covenants can potentially reduce moral hazard, a problem with restrictive coven

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Although restrictive covenants can potentially reduce moral hazard, a problem with restrictive coven

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.

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

Edition: 4^th

Author: Mishkin

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Our course uses > The Economics of Money, Banking and Financial Markets

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valputin Author

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8 years ago

Correct

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Our course uses > The Economics of Money, Banking and Financial Markets

Meela

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8 years ago

@valputin,

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