Get premium membership and access questions with answers, video lessons as well as revision papers.

What is the importance of contractual covenants to money lenders?

      

What is the importance of contractual covenants to money lenders?

  

Answers


Dana
Covenants allow the lenders to control the activities of the borrower to protect themselves for the agency problem between the lenders and the loan created by the loan. Without these provisions, the borrower could take advantage of the lender by investing in riskier projects without compensating lenders with high interest rate on their loans

Dana05 answered the question on July 18, 2019 at 19:23


Next: Differentiate between the primary and the secondary markets in the issuance of shares
Previous: What is the function of brokers and dealers in the secondary market

View More Economics Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions