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Find which about loan covernant are true

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Reference no: EM132974154

Problem 1: Which of the following about loan covernant is/are TRUE? (One or more than one options may be correct.)

Select one or more:

a. The existence of covenants in a loan issue increase the risk of the loan.

b. For the lender, loan covenants are usually used as a security measure to make sure there is enough cash flow or stability with the borrowing party so that they are able to pay back the loan.

c. A loan covenant is a legal clause in a borrowing contract that requires the borrower to either take certain actions or avoid certain actions.

d. Loan covenants are rarely used in commercial loans but often used in consumer loans.

Reference no: EM132974154

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