The purpose of the restrictive debt covenant that requires that subseq
The purpose of the restrictive debt covenant that requires that subsequent borrowing be subordinated to the original loan is to ________.
A) maintain a minimum level of liquidity
B) limit the amount of fixed-payment obligations
C) ensure a long-run cash shortage does not cause an inability to meet current obligations
D) protect the original lender in the priority of claims during liquidation
ANSWER
D
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