Asked by Harun Abdullahi on May 12, 2024
Verified
The section of a loan agreement that describes circumstances in which the creditor obtains additional rights is called the
A) events of compliance section.
B) certificate of compliance section.
C) events of termination section.
D) events of default section.
Loan Agreement
A contract between a borrower and a lender outlining the terms and conditions of a loan.
Events of Default
Specific conditions or circumstances outlined in a loan agreement or bond indenture that, when occurring, grant the lender the right to demand early repayment or take other corrective actions.
- Recognize and distinguish among the different varieties of loan covenants and their objectives.
- Decipher the criticality of Generally Accepted Accounting Principles in financial covenants and assess the consequences of accounting selections on debt agreements.
Verified Answer
AM
Ashley MoffattMay 15, 2024
Final Answer :
D
Explanation :
The section of a loan agreement that describes circumstances in which the creditor obtains additional rights is called the events of default section. This section outlines situations in which the borrower is in breach of the loan agreement, which gives the creditor the right to take action, such as demanding immediate payment or seizing collateral.
Learning Objectives
- Recognize and distinguish among the different varieties of loan covenants and their objectives.
- Decipher the criticality of Generally Accepted Accounting Principles in financial covenants and assess the consequences of accounting selections on debt agreements.