Which of the following provisions/features allows the firm to repurchase and retire a given percentage of its preferred stock each year?

Question

Quizplus · Accepted Answer

The provision/feature that allows the firm to repurchase and retire a given percentage of its preferred stock each year is known as the sinking fund. The sinking fund is a requirement in the issuance of preferred stocks, which mandates the issuer to set aside a certain portion of the preferred stock's face value for a specific period. The purpose of the sinking fund is to retire the preferred stock gradually and reduce the issuer's outstanding preferred stock balance.

Which of the Following Provisions/features Allows the Firm to Repurchase