Which of the Following Is a Typical Bond Covenant Restriction

Multiple Choice

Which of the following is a typical bond covenant restriction on mergers and acquisitions?

A) Funding for acquisitions cannot include new debt.
B) Acquisitions can be made only once existing debt has been paid.
C) Mergers are allowed only if the combined firm's earnings exceed some threshold.
D) Mergers are allowed only if the combined firm has a minimum ratio of net tangible assets to debt.
E) Mergers are allowed only if the combined firm has a lower cost of issuing new debt.