What are the remedial steps if the covenants are breached

Reference no: EM13924776

1. How are financial covenants fixed?

2. What are the remedial steps if the covenants are breached?

3. One of your friends argues that collaterals are meaningless. He points out that during the housing sector boom in the US in 2004-06, several credit products (MBS, CDO, etc.) were innovated with the backing of collateral such as real estate. However, during the 2008 Credit Crisis the collaterals did not offer much comfort and many banks and financial institutions suffered losses on such products. Do you agree? Please elaborate.

Reference no: EM13924776

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