Which of the Following Statements Is CORRECT

question 41

Multiple Choice

Which of the following statements is CORRECT?

• A)Sinking fund provisions sometimes turn out to adversely affect bondholders, and this is most likely to occur if interest rates decline after the bond has been issued.
• B)Most sinking funds require the issuer to provide funds to a trustee, who saves the money so that it will be available to pay off bondholders when the bonds mature.
• C)A sinking fund provision makes a bond more risky to investors at the time of issuance.
• D)Sinking fund provisions never require companies to retire their debt; they only establish "targets" for the company to reduce its debt over time.
• E)If interest rates have increased since a company issued bonds with a sinking fund, the company is less likely to retire the bonds by buying them back in the open market, as opposed to calling them in at the sinking fund call price.

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Definitions:

Cultural Animals

Humans considered in the context of their cultural influences and behaviors, emphasizing the unique aspects of human life shaped by social and cultural factors.

Social Animals

Animals that seek connections to others and prefer to live, work, and play with other members of their species.

Cultural Animal

A term that highlights the notion that humans are deeply influenced and shaped by their cultural environments and social learning.

Social Animal

A term used to describe humans or other creatures that are innately inclined to live in communities or groups.