Which of the following statements regarding the analysis of covenants for high-yield issuers is least accurate? A) An analysis of covenants is more critical for high-yield issuers than for investment grade issuers. B) An analyst should examine whether a no contest clause exists that may change the priority of the claims of the firm’s debtholders. C) Loopholes in the covenants may reveal the intentions of management. D) Covenants provide important insight into the issuing company’s strategy.
what’s a no contest clause exactly? i’d think B or D… we’ll go D but i don’t know what a no contest clause is. bad me. someone who nails this tell me.
put me down for D also…
I think it is when there is priority on some assets that can not be overruled but don’t know for sure either
Choose D. Answer B
dang - just found this in the CFAI text. It’s all in one little paragraph…