The use of a call provision in addition to a sinking fund can effectively create a maturity date for preferred stock.

Question

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The use of a call provision allows the issuer of preferred stock to redeem the shares at a specific price and date, while a sinking fund is a mechanism for gradually retiring the preferred shares over time. By combining these two features, the issuer can effectively establish a maturity date for the preferred stock, providing investors with greater certainty and predictability regarding the timing and amount of their return on investment.

The Use of a Call Provision in Addition to a Sinking