ondholders often employ a variety of devices$$including restrictive covenants in the company$$s bond indenture agreements$$to protect their interests and constrain the actions of shareholders and the firm$$s managers.

Which of the following are restrictive covenants often used to protect the firm$$s bond value and bondholder wealth? Check all that apply.

Provisions that limit issuing new debt securities

Provisions that limit the type of investments or divestments that the firm can undertake

Provisions that require issuing new debt securities whenever interest rates drop below $5\%$

Provisions that prohibit borrowing funds to pay dividends

In addition, potential bondholders may require a interest rate on the firm$$s soon$-$to$-$be$-$issued bond as compensation for the risks that cannot be adequately protected against using the restrictive covenants.