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) sinking
C) debenture
D) indenture
E) money

Question

Quizplus · Accepted Answer

A sinking fund is specifically set up to redeem a bond issue over time. The fund receives regularly scheduled deposits which are then used to redeem a portion of the bond issue at maturity. This helps to ensure that the issuer has the funds available to fully repay the bondholders at maturity.

A Fund to Which Annual or Semiannual Deposits Are Made