Question

Sinking funds are devices used to force companies to retire bonds on a scheuled basis prior to their maturity. Many bond indentures allow the company to aquire bonds for a sinking fund by either purchasing bonds in the market or selecting the bonds to be aquired by a lottery administered by the trustee through a call of face value.

True or false?

Answer 1

Answer: True

Step-by-step explanation:

Sinking fund is referred to as a fund that tends to contain money which is set aside or is saved in order to pay off a bond or debt. An organization that issues the debt will further in future need to cover that debt off, and thus these sinking fund tends to help to ease hardship of large outlay of the revenue. The fund provisions tends to usually allow an organization to repurchase their bonds and at specified or particular sinking fund price or prevailing market price.