A bond's sinking fund provisions specifies
A) which assets are available to secure the bond.
B) how the issuer will pay off the bond over time.
C) which bond issues have a higher claim on the firm's assets in case the firm goes under.
D) a diminishing series of interest payments as the bond approaches maturity.

Question

Quizplus · Accepted Answer

A sinking fund provision in a bond's terms specifies how the issuer will pay off the bond over time, often through periodic payments into a sinking fund used to redeem bonds early or at maturity.

A Bond's Sinking Fund Provisions Specifies