Which of the following statements is FALSE?

A.

Bond agreements often contain covenants that restrict the ability of management to pay dividends.

B.

Covenants are restrictive clauses in a bond contract that limit the issuer from taking actions that may undercut its ability to repay the bonds.

C.

The stronger the covenants in the bond contract, the less likely an issuer will default on the bond and so the lower the interest rate investors will require to buy the bond.

D.

If a bond issuer fails to live up to any Covenent, the issuer goes into bankruptcy immedietly