Which of the following is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue?

Question

Quizplus · Accepted Answer

A sinking fund is a type of fund to which regular deposits are made with the intention of redeeming a bond issue. These funds allow bond issuers to reduce the risk of default by ensuring that they have sufficient funds set aside to repay the bonds when they mature. The use of a sinking fund can also help lower the interest rate on a bond issue, as investors are more likely to be willing to accept a lower rate of return if they perceive the issuer as being less risky.

Which of the Following Is a Fund to Which Annual