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Question
All of the statements below are true of futures contracts except that futures contracts
A. result in predictable cash flows.
B. eliminate downside risk and upside potential.
C. eliminate downside risk while allowing for upside potential.
D. result in predictable gross profits.
Answer
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Because covenant compliance can be jeopardized by mandated changes in accounting principles, many loan agreements have financial covenants that rely on the accounting rules in place when the loan is first granted.
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C. negative restrictions.
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B. borrowers.
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