Companies that plan to retire bonds in the future could utilize sinking funds.

Question

Quizplus · Accepted Answer

Sinking funds are commonly used by companies to ensure that they have the necessary funds to retire their bonds when they mature. By setting aside money in a sinking fund, the company is able to spread out the cost of retiring its debt over time, rather than having to come up with a large sum of money all at once. This can make it easier for the company to manage its debt and can improve its creditworthiness over the long term.

Companies That Plan to Retire Bonds in the Future Could