Why would debt holders desire covenants that restrict the firms ability to pay dividends, and why might

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Why would debt holders desire covenants that restrict the firm’s ability to pay dividends, and why might shareholders also benefit from this restriction?

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Corporate Finance

ISBN: 9780132992473

3rd Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Mar 07, 2024 01:00 AM

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Why would debt holders desire covenants that restrict the firms ability to pay dividends, and why might

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Debt holders such as bondholders or lenders may desire covenants that restrict a firms ability to pay dividends for several reasons Risk Mitigation By ...View the full answer

Corporate Finance

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