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      Question

      Conditions imposed by the lender on the borrower that

      certain activities will or will not be carried out are called…………
      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

      Conditions imposed by the lender on the borrower that certain activities will or  will not be  carried out are called Covenants. They 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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