A bond feature that requires firms to repurchase a portion of its bonds on a regular basis throughout the life of the bonds,or to set aside an equivalent amount is known as a:
A)debenture contract.
B)call option feature.
C)sinking fund.
D)put option feature.

Question

Quizplus · Accepted Answer

A sinking fund is a feature or provision in a bond agreement that requires the issuer to set aside money periodically or make payments to a trustee, which is used to retire a portion of the bonds before their maturity date. This helps the issuer to reduce the outstanding debt gradually and minimize the risk of default.

A Bond Feature That Requires Firms to Repurchase a Portion