Which of the Following Statements Regarding Sinking Fund Provisions Is

question 64

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:

Export Demand

The desire and willingness of foreign consumers and businesses to purchase goods and services produced in another country.

American Agriculture

Farming practices and industry in the United States, characterized by advanced technology, large-scale operations, and significant global exports.

International Value

The worth of a product or service recognized across different countries, taking into account exchange rates and global demand.

Price Support

Government or regulatory interventions to maintain the price of a commodity at a certain level to protect producers from market fluctuations.