A Bond with a Balloon Payment Cannot Not Have a Sinking

question 32

True/False

A bond with a balloon payment cannot not have a sinking fund.

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Definitions:

EBIT

Stands for Earnings Before Interest and Taxes, and is an indicator of a company's profitability excluding interest and tax expenses.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, typically expressed as an annual rate.

Cash Coverage Ratio

A financial metric that measures a company’s ability to cover its debt obligations with its operating cash flow.