When Issuing Debt, a Company May Use a Sinking Fund

question 25

Multiple Choice

When issuing debt, a company may use a sinking fund arrangement as a means of reducing:

• A) credit risk.
• B) inflation risk.
• C) interest rate risk.

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Definitions:

Aversion Therapy

A form of psychological treatment in which an undesirable behavior is paired with an unpleasant stimulus to reduce the occurrence of that behavior.

Exposure and Response-Prevention Therapy

A form of cognitive-behavioral therapy primarily used to treat obsessive-compulsive disorder, involving exposure to feared situations and prevention of the subsequent compulsive response.

Obsessive-Compulsive Disorder

A mental health condition characterized by recurrent, unwanted thoughts (obsessions) and repetitive behaviors (compulsions).

Coulrophobia

An irrational fear of clowns, often resulting in anxiety and avoidance behaviors.