Chapter 104 NWP Assessment Player Ul Application Player apter 10.4 Question 4 of 5 0/1 E View Policies Show Attempt History Current Attempt in Progress * Your answer is incorrect Why do covenant-lite" loan agreements sometimes put lenders into trouble. Covenants ulve certain rights to lenders, such as, ability to collect interest, and in the absence of covenants a lender will not be able to collect interest. Covenants act as early warning signs and if they are not in the loan agreement the lender will not know about the deteriorating financial condition of a borrower before it is too late with "lite" covenants borrowers do not have to provide any collateral to secure the loan which weakens alender's position when it comes to scovery of principal under a default. Lenders cannot force a company into bankruptcy if the latter defaults. e Textbook and Media Save For Later Attempts: 1 of 2 used Submit