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:

Linear Regression Equation

An equation used to predict a dependent variable based on one or more independent variables, representing the line of best fit.

Y-Intercept

The point at which a line crosses the y-axis on a graph.

X-Intercept

The point at which a line or curve on a graph crosses the x-axis, indicating a value of x where the function equals zero.

Slope

The slope refers to the steepness or incline of a line on a graph, representing the rate of change between variables.