A provision in the bond indenture that forces the corporation to make arrangements for bond repayment before the maturity date is called a ____________ fund.

Question

Quizplus · Accepted Answer

A sinking fund is a provision in a bond indenture that requires the corporation to set aside money at regular intervals into a separate account to repay the bondholders at maturity. This ensures that the corporation has enough money to repay the bondholders and reduces the risk for investors.

A Provision in the Bond Indenture That Forces the Corporation