Even Though Many Bonds Have Deferred Sinking Funds, the Sinking

question 84

Multiple Choice

Even though many bonds have deferred sinking funds, the sinking fund has the following effects on bondholders:
I.provides extra protection to bondholders as both an early warning system and perhaps some collateral cash;
II.provides an option to the firm to buy bonds at the lower of market or face value;
III.puts the bondholders at added risk due to potential inability to meet sinking fund payments

• A)I and II only
• B)III only
• C)II only
• D)II and III only

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Definitions:

Alarm Stage

The initial reaction of the body's stress response, marked by heightened awareness and mobilization of resources to confront a perceived threat.

ABC Approach

A behavioral management strategy focusing on Antecedent, Behavior, and Consequence to understand and modify behavior.

Albert Ellis

An American psychologist who developed Rational Emotive Behavior Therapy (REBT), a form of cognitive behavioral therapy.

Emotional Stress

A condition of strain on one's emotions caused by various factors, often leading to physical and psychological health issues.