Debt that may be extinguished before maturity is referred to as:
A) sinking-fund debt.
B) debentures.
C) callable debt.
D) indenture debt.
E) None of these.

Question

Quizplus · Accepted Answer

Callable debt can be extinguished before maturity, as the issuer has the option to redeem the bond or loan. Sinking-fund debt refers to bonds or loans where the borrower periodically sets aside money to retire the debt, but this does not necessarily mean that the debt will be extinguished before maturity. Debentures and indenture debt are generic terms that do not necessarily imply a specific feature related to extinguishment before maturity.

Debt That May Be Extinguished Before Maturity Is Referred to As