Question

An example of a negative covenant that might be found in a bond indenture is a statement that the company: cannot lease any major assets without bondholder approval. shall maintain a cash surplus of $100,000 at all times. shall provide audited financial statements in a timely manner. must maintain the loan collateral in good working order. shall maintain a current ratio of 1.1 or higher.

Answer 1

Answer:

cannot lease any major assets without bondholder approval

Explanation:

A negative covenant refers to a bond covenant in which it prevents some activities until agreed. It is a promise by a company that are not made excess to some specific financial ratios or not conduct any specific activities

It is to be found in the documents that are related to the bond or loan

Therefore according to the given situation, the first option is correct