The purpose of a negative pledge on the borrower's assets in an unsecured bank loan agreement is to ensure that the loan is senior to other loans of the borrower.ensure that the loan is subordinated to other loans of the borrower.prevent the borrower from issuing any bonds in the future.ensure that the borrower cannot subsequently take up other loans with a differentlender, securing the subsequent loan with the borrower's assets.ensure that the borrower cannot subsequently lend money to other firms withoutinsisting on collaterals to secure the loan.

Negative pledge is included in contracts to prevent the borrower from using their assets to obtain…

Answered: The purpose of a negative pledge on the…

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The purpose of a negative pledge on the borrower's assets in an unsecured bank loan agreement is to

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 6TP: When a customer is delinquent on paying a notes receivable, your company has the option to continue...

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Question

The purpose of a negative pledge on the borrower's assets in an unsecured bank loan agreement is to

ensure that the loan is senior to other loans of the borrower.
ensure that the loan is subordinated to other loans of the borrower.
prevent the borrower from issuing any bonds in the future.
ensure that the borrower cannot subsequently take up other loans with a different
lender, securing the subsequent loan with the borrower's assets.
ensure that the borrower cannot subsequently lend money to other firms without
insisting on collaterals to secure the loan.

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