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Loans & Lending Practices MCQs

What is the purpose of covenants?

They are required by law to be placed on all borrowers

To force a borrower to abide by rules which compel the borrower to stay in a situation where they can repay the loan

The IRS forces the lenders to place them on all commercial loans

To protect the borrower

Answer

Correct Answer: To force a borrower to abide by rules which compel the borrower to stay in a situation where they can repay the loan

Explanation:

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