Even Though Many Bonds Have Deferred Sinking Funds, the Sinking

question 71

Multiple Choice

Even though many bonds have deferred sinking funds, the sinking fund has the following effects on bondholders:

• A)provides extra protection to bondholders as both an early warning system and perhaps some collateral cash and provides an option to the firm to buy bonds at the lower of market or face value.
• B)puts the bondholders at added risk due to potential inability to meet sinking fund payments.
• C)provides an option to the firm to buy bonds at the lower of market or face value.
• D)provides an option to the firm to buy bonds at the lower of market or face value and puts the bondholders at added risk due to potential inability to meet sinking fund payments.

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Definitions:

Networking

Building and maintaining professional relationships to exchange information, advice, and support.

Persuasive Communication

The technique of using messages designed to influence or change a recipient's attitudes, beliefs, or actions towards a particular idea or behavior.

Networking

The act of interacting with others to exchange information and develop professional or social contacts.

Informal Connections

Unofficial relationships or networks that form between people outside of formal organizational structures or hierarchies.