Even Though Many Bonds Have Deferred Sinking Funds, the Sinking

question 96

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:

Proximity

The physical closeness or distance between two points or objects, often influencing the relationship or interaction between them.

Similarity

The state or fact of being alike or having common features, which can lead to the grouping of objects or ideas in cognitive processes.

Physical Attractiveness

The degree to which a person's physical features are considered aesthetically pleasing or beautiful by others.

Stanford Prison Experiment

A 1971 psychological study of the human response to captivity, in which participants were randomly assigned roles of prisoners or guards.