Question

When a borrower violates a loan covenant that requires minimum achievement of an accounting measure in the financial statements, the lender can:

Multiple Choice
a. call for immediate repayment of the loan.
b. report the borrower to the IRS.
c. fire the chief operating officer of the borrower.
d. immediately seize the loan collateral.

Answer 1

When a borrower violates a loan covenant, the lender can call for immediate repayment of the loan.

Step-by-step explanation:

When a borrower violates a loan covenant that requires minimum achievement of an accounting measure in the financial statements, the lender can call for immediate repayment of the loan. This means that the borrower must immediately pay back the full amount of the loan. The lender can enforce this by taking legal action or resorting to other measures to ensure repayment.