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1.What is the purpose of loan covenants? To require or restrict the borrower from doing something that could affect their creditworthiness. To make the monitoring

1.What is the purpose of loan covenants?

To require or restrict the borrower from doing something that could affect their creditworthiness.

To make the monitoring process more efficient, as the lender can determine creditworthiness based on whether any covenants have been breached.

To allow the financial institution to affect the decision-making of the borrower.

To encourage the company to be run with financially sound best practices.

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