The Purpose of the Restrictive Debt Covenant That Prohibits Borrowers

Multiple Choice

The purpose of the restrictive debt covenant that prohibits borrowers from entering into certain types of leases is to

A) limit the amount of fixed-payment obligations.
B) protect the lender by controlling the risk and marketability of the borrower's security investments alternatives.
C) ensure a cash shortage does not cause an inability to meet current obligations.
D) prevent liquidation of assets through large salary increases of key employees.