Multiple Choice
The purpose of the restrictive debt covenant that requires that subsequent borrowing be subordinated to the original loan is to ________.
A) maintain a minimum level of liquidity
B) limit the amount of fixed-payment obligations
C) ensure a long-run cash shortage does not cause an inability to meet current obligations
D) protect the original lender in the priority of claims during liquidation
Correct Answer:
Verified
Correct Answer:
Verified
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