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    Question

    Which of the following term is used to describe the

    conditions imposed by the lender on the borrower that certain activities  will or  will  not be  carried out?             
    A Indenture Correct Answer Incorrect Answer
    B Stipulations Correct Answer Incorrect Answer
    C Covenants Correct Answer Incorrect Answer
    D Guidelines Correct Answer Incorrect Answer
    E Restrictions Correct Answer Incorrect Answer

    Solution

    Covenants are stipulated by the lenders to  protect themselves from borrowers defaulting on  their obligations due  to financial actions detrimental to themselves or the business. Covenants are stipulated at the time  of sanction / approval of limits or at the time of review of facilities

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