Question
A technical default occurs when the borrower violates one or more of the loan covenants, but has made all principal and interest payments. Which of
A technical default occurs when the borrower violates one or more of the loan covenants, but has made all principal and interest payments. Which of the following is true?
a. A. Loan covenants prohibit managers from making choices that reduce the likelihood of technical default
b. Technical defaults that have not been cured should be disclosed in the nancial statements
c. Technical defaults are not likely to change an analysts assessment of liquidity.
d. Discretionary accounting accruals are not likely to provide managers enough room to avoid technical default.
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