The purpose of the restrictive debt covenant that requires that ...

[CQXA]

The purpose of the restrictive debt covenant that requires that subsequent borrowing be subordinated to the original loan is to ________.
 
  A) maintain a minimum level of liquidity
  B) limit the amount of fixed-payment obligations
  C) ensure a long-run cash shortage does not cause an inability to meet current obligations
  D) protect the original lender in the priority of claims during liquidation

Question 2

The purpose of the restrictive debt covenant that prohibits the sale of accounts receivable is to ________.
 
  A) assure the lender that additional borrowing is constrained
  B) limit the amount of fixed-payment obligations
  C) limit the realization of current assets to cash
  D) limit the payment of annual cash dividends

[daiying98]

Answer to Question 1

D

Answer to Question 2

C

[CQXA]

Excellent

[triiciiaa]

TYSM