Which of the Following Is Not Usually a Requirement of a Debt

question 14

Multiple Choice

Which of the following is not usually a requirement of a Debt Service Fund (DSF) for a term bond issue?

• A) The DSF should be used to accumulate the necessary funds to pay the term bonds when they come due.
• B) The DSF makes periodic interest payment on the debt during its life.
• C) The DSF will have funded reserves as required by the debt covenant.
• D) A DSF that services a term bond issue is used to account for principal retirement only, with interest expenditures made directly from the General Fund.

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Definitions:

Diminishing Marginal Utility

The principle that as a consumer consumes more of a good, the additional satisfaction gained from each additional unit decreases.

Staples

Basic or essential goods and services that are consumed regularly by individuals or businesses.

Paper Clips

Paper clips are small pieces of bent wire or plastic used for holding sheets of paper together.

Marginal Utility

The additional satisfaction or utility that a person receives from consuming one additional unit of a good or service.