A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n) ____________ fund.
A)serial
B)money
C)debenture
D)indenture
E)sinking

Question

Quizplus · Accepted Answer

A sinking fund is a fund to which regular deposits are made to redeem a bond issue at maturity. The purpose of the sinking fund is to ensure that there is enough money available to pay off the bonds when they come due. This helps to reduce the risk of default and makes the bonds more attractive to investors.

A Fund to Which Annual or Semiannual Deposits Are Made