Which of the following is NOT a common bondholder covenant?
A) Dividends cannot be paid unless there is sufficient cash to cover the next coupon payment.
B) Dividends may be prohibited above a certain percentage of current earnings.
C) If the firm has insufficient cash to cover required coupon payments, shareholders will pay interest directly from their own accounts on a pro rata basis.
D) All of the above are common bondholder covenants.
Answer: C
Explanation: C) Shareholders are not required nor would they agree to pay interest from their own personal wealth.
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