A sinking fund is
A) setting aside a portion of the principal each year.
B) money invested poorly.
C) a low-interest investment.
D) a bond that decreases in value until maturity.

Question

Quizplus · Accepted Answer

A sinking fund is a strategy where a company or individual sets aside money over time to pay off a debt or upcoming expense. It involves saving a portion of the principal regularly to ensure the future liability can be met. This method is often used to repay bonds or loans systematically, ensuring that the full amount is available when due.

A Sinking Fund Is