When a Bond Indenture Includes a Sinking Fund Provision

When a bond indenture includes a sinking fund provision

A) firms must establish a cash fund for future bond redemption.
B) bondholders always benefit, because principal repayment on the scheduled maturity date is guaranteed.
C) bondholders may lose because their bonds can be repurchased by the corporation at below-market prices.
D) both A and B are true.
E) none of the above are true.