Question
When a sinking fund is used for corporate bonds, the issuing corporation Select one: A. can...
When a sinking fund is used for corporate bonds, the issuing corporation
Select one: A. can wait until its bonds reach maturity before setting funds aside for repaying the bonds. B. will be able to convert its bonds into common stock when the bonds reach maturity. C. can choose to redeem its bonds whenever market interest rates decline. D. makes routine installment payments to a fund in advance of retiring the bonds.
Answers
Correct choice is option D
Explanation: Sinking fund is made to regularly set aside a particular amount in advance of retiring or redemption of bond and this is done so that company does not need to face liquidity problem at the time of retirement because of paying huge amount .
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