Which of the Following Statements Concerning the Use of Sinking

question 20

Multiple Choice

Which of the following statements concerning the use of sinking funds to repurchase a bond issue is NOT true?

• A)The firm can reduce the amount of outstanding debt without affecting the cash flows of the remaining bonds.
• B)Payments from the sinking fund are used to repurchase bonds.
• C)The firm makes regular payments into a sinking fund administered by a trustee over the life of the bond.
• D)Bonds can be issued with a sinking fund provision or a call provision, but not both.

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Definitions:

Methanol

The simplest alcohol, with the chemical formula CH3OH, used as a solvent, antifreeze, fuel, and as a feedstock for chemical synthesis.

Mechanisms

The step-by-step sequences of elementary reactions by which overall chemical change occurs.

Carbocation Intermediate

A positively charged carbon species that appears as a reactive intermediate in many organic reactions.

Mechanisms

Detailed pathways and steps through which reactants proceed to form products in a chemical reaction, involving intermediates and transition states.