Why Do the Issuers of Bonds Not Seek to Minimise

Multiple Choice

Why do the issuers of bonds not seek to minimise the strength and number of covenants in a bond agreement?

A) Covenants favor the equity holders that managers work for.
B) Covenants lower the interest rate investors will require to buy the bond.
C) Covenants force the company to renegotiate the terms of the bond if they are broken.
D) Covenants can increase the flexibility of the company issuing the bond.