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although restrictive covenants can potentially reduce moral hazard, a problem with restrictive covenants is that
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although restrictive covenants can potentially reduce moral hazard, a problem with restrictive covenants is that

User Asad Ali Choudhry
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Answer: Restrictive covenants can reduce moral hazard but they must be monitored and enforced to be effective. If bondholders know that other bondholders are monitoring and enforcing the restrictive covenants, they can free ride.

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User Sookie Singh
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