Debt covenants under bond indenture

Assignment Help Financial Management

Reference no: EM131837511

T or F

1. When an organization is unable to fulfill the obligations of its debt covenants under a bond indenture, the legal consequence could result in the organization’s assets being transferred to the bondholders. where the assets of the firm are transferred to the debt-holders.

2. In an effort to optimize the capital structure, an organization may continue to add debt to the capital structure, up to some point where the tax benefits of the debt are overcome by the burden of interest payments

3. The hurdle rate represents the minimum rate of return a project must generate in order to meet the return expected by the sources of all of the company’s capital.

Reference no: EM131837511

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