Which Statement Regarding Sinking Funds Is True

question 66

Multiple Choice

Which statement regarding sinking funds is true?

• A)Sinking fund provisions sometimes adversely affect bondholders, and this is most likely to occur if interest rates decline after the bond has been issued.
• B)Most sinking funds require the issuer to provide funds to a trustee, which saves the money so that it will be available to pay off bondholders when the bonds mature.
• C)A sinking fund provision makes a bond more risky to investors at the time of issuance.
• D)Sinking fund provisions never require companies to retire their debt; they only establish "targets" for the company to reduce its debt over time.

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