The Purpose of a Sinking Fund Is To

question 266

Multiple Choice

The purpose of a sinking fund is to:

• A) Distribute the proceeds received from a bond issue over a period of time.
• B) Gather funds so that sufficient money is available when the bond issue matures to pay off the debt.
• C) Distribute the interest payments to the individual bondholders.
• D) Retire part or all of a bond issue prior to maturity.
• E) Retain the interest that accrues on zero coupon bonds.

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Definitions:

Lower Reaches

The downstream part of a river close to its mouth where it meets a larger body of water.

Aquifer

An underground layer of water-bearing permeable rock, rock fractures or unconsolidated materials (gravel, sand, or silt) that can yield significant quantities of water.

Well

A deep hole drilled or dug into the ground to access water, oil, gas, or other underground resources.

Urban Developments

The process of developing areas for residential, commercial, or industrial use within cities or towns.