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:

Thorndike

An American psychologist who contributed to the understanding of learning and intelligence, best known for his work on the law of effect and puzzle boxes.

Strengthening Responses

The process of increasing the likelihood of a behavioral response by reinforcing it, similar to reinforcement.

Unconditioned Stimulus (UCS)

In classical conditioning, a stimulus that instinctively and effortlessly elicits a response without any previous conditioning.

Conditioned Stimulus (CS)

An initially neutral signal that, once paired with an unconditioned stimulus, begins to evoke a conditioned reaction.