The Purpose of the Restrictive Debt Covenant That Imposes Fixed

Multiple Choice

The purpose of the restrictive debt covenant that imposes fixed assets restrictions is to

A) protect the lender by controlling the risk and marketability of the borrower's security investment alternatives.
B) limit the amount of fixed-payment obligations.
C) ensure a cash shortage does not cause an inability to meet current obligations.
D) prevent the firm from liquidation, acquisition, or encumbrance of capital assets.