Which of the Following Statements Concerning the Use of Sinking

question 82

Multiple Choice

Which of the following statements concerning the use of sinking funds to repurchase a bond issueis NOT true?

• A) Payments from the sinking fund are used to repurchase bonds.
• B) The firm makes regular payments into a sinking fund administered by a trustee over the life of the bond.
• C) The firm can reduce the amount of outstanding debt without affecting the cash flows of the remaining bonds.
• D) Bonds can be issued with a sinking fund provision or a call provision, but not both.

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Definitions:

Years with Partnership

The duration of time an individual has been involved or engaged in a business partnership.

Profit Allocation

The process of dividing the profits of a company among its stakeholders, such as shareholders, employees, or departments.

Capital Balances

The amount of money that each partner or shareholder has contributed to a company, plus their share of the net income, minus any withdrawals.