Which One of the Following Statements Concerning Sinking Funds Is

question 108

Multiple Choice

Which one of the following statements concerning sinking funds is correct?

• A)Bond issuers must fund a sinking fund at the time the bonds are issued.
• B)Sinking funds must include at least one "balloon payment."
• C)Sinking funds must be funded annually, starting on the issue date.
• D)Sinking funds may be used to purchase bonds in the open market.
• E)Sinking funds can be used only to call bonds.

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Definitions:

Surplus

A situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Substitution Effect

The economic concept that as prices rise (or incomes decrease), consumers will replace more expensive items with cheaper alternatives, holding utility constant.

Relative Price

Relative price is the price of one good or service compared to another, essentially indicating the trade-off between choosing one over the other.

Price Increases

Price Increases involve a rise in the cost of goods or services over time, often measured by inflation rates.