Ozemoore Enterprises is preparing to issue some new bonds.Financial manager Rex Hilliard wants to make sure that the firm has a plan to retire the bonds in an orderly manner.What kind of arrangement in the bond agreement would he most likely recommend that the company include?

Question

Quizplus · Accepted Answer

Rex Hilliard would most likely recommend that the company include a sinking fund arrangement in the bond agreement. This would require the company to make regular contributions to a fund that would be used to retire the bonds at maturity. It provides a structured and predictable way for the company to retire the debt and reduce its risk of default. A capital budget is focused on investments in fixed assets, whereas an operating budget is focused on day-to-day expenses. A mutual fund is an investment vehicle that pools money from multiple investors to purchase securities.

Ozemoore Enterprises Is Preparing to Issue Some New Bonds