Which of the Following Statements Concerning the Use of Sinking

question 1

Multiple Choice

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

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

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Definitions:

Private Ownership

Refers to assets or properties owned by individuals or companies and not by the government or public entities.

Government Services

The range of services provided by government agencies to citizens including sanitation, public education, healthcare, policing, and transportation.

Uncertainty Avoidance

A cultural dimension that describes how societies deal with the unknown, with high avoidance indicating a preference for clear rules and low avoidance reflecting more comfort with ambiguity.

Cultural Relativism

The perspective that beliefs, morals, and ethics are relative to each individual within his or her own social context.