Question: a. What is the reason for restrictive covenants in long-term debt indentures? b. What is the reason for provisions regarding: (1) Maintenance of minimum working

a. What is the reason for restrictive covenants in long-term debt indentures?

b. What is the reason for provisions regarding:

(1) Maintenance of minimum working capital (or current ratio)?

(2) Maintenance of minimum shareholders’ equity?

(3) Restrictions on dividend payments?

(4) Power of creditors to elect a majority of the board of directors of the debtor company in the event of default under terms of the loan agreement?

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