Although Restrictive Covenants Can Potentially Reduce Moral Hazard,a Problem with Restrictive

Multiple Choice

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

A) borrowers may find loopholes that make the covenants ineffective.
B) they are costly to monitor and enforce.
C) too many resources may be devoted to monitoring and enforcing them, as debtholders duplicate others' monitoring and enforcement efforts.
D) all of the above.
E) only A and B of the above.