| agency costs | Costs of conflicts of interest among stockholders, bondholders, and managers. Agency costs are the costs of resolving these conflicts. They include the costs of providing managers with an incentive to maximize shareholder wealth and then monitoring their behavior, and the cost of protecting bondholders from shareholders. Agency costs are borne by stockholders.
|
 |
|
|
| marketed claims | Claims that can be bought and sold in financial markets, such as those of stockholders and bondholders.
|
|
|
|
| negative covenant | Part of the indenture or loan agreement that limits or prohibits actions that the company may take.
|
|
|
|
| nonmarketed claims | Claims that cannot be easily bought and sold in the financial markets, such as those of the government and litigants in lawsuits.
|
|
|
|
| positive covenant | Part of the indenture or loan agreement that specifies an action that the company must abide by.
|
|
|
|
| protective covenants | A part of the indenture or loan agreement that limits certain actions a company takes during the term of the loan to protect the lender's interest.
|