CIMA Exam CIMAPRA19-F03-1 Topic 2 Question 15 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 15
Topic #: 2

A company's Board of Directors is consideringraisinga long-term bank loan incorporatinga number of covenants.

TheBoard members are unsure what loan covenants involve.

WhichTHREEof the following statementsregardingloan covenants are true?

AA positive loan covenant would require the company to undertake specific actions.

BA loan covenant has no contractually binding obligations.

CA restrictive covenant prohibits the company from conducting certain actions without the approval of the lending institution.

DA covenant gives the financial institution the right but not the obligation to convert debt into equity in a case of non-compliance.

EA financial covenant usually requires the company to adhere to specific financial conditions or targets.

Show Suggested Answer

Suggested Answer: A, C, E

by Delisa at May 05, 2022, 06:02 PM

Limited Time Offer

25%

Off

Contribute your Thoughts:

Submit Cancel

Currently there are no comments in this discussion, be the first to comment!