Which of the Following Statements Regarding Sinking Fund Provisions Is

question 49

Multiple Choice

Which of the following statements regarding sinking fund provisions is false?

• A) With a sinking fund, if a bond is trading at below its face value, because the bonds are repurchased at par the decision as to which bonds to repurchase is made by lottery.
• B) With a sinking fund, instead of repaying the entire principal balance on the maturity date, the company makes regular payments into a sinking fund administered by a trustee over the life of the bond.
• C) Sinking fund provisions usually specify a minimum rate at which the issuer must contribute to the fund.
• D) Because the sinking fund allows the issuer to repurchase the bonds at par, the option to accelerate the payments is another form of call provision.

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Definitions:

Axillary Lymph Nodes

Lymph nodes located in the armpit region that filter lymph and assist in the body's immune response.

Cardiovascular System

The body system comprising the heart and blood vessels, responsible for circulating blood to deliver oxygen and nutrients to tissues.

Lymphatic System

A network of tissues and organs that help rid the body of toxins, waste, and other unwanted materials, primarily involved in transporting lymph, a fluid containing infection-fighting white blood cells.

Nonencapsulated

Refers to tissues or structures not enclosed in a protective capsule.