A sinking fund is a requirement in the bond indenture that the firm pay off a portion of the bond issue each year.

Name: A sinking fund is a requirement in the bond indenture that the firm pay off a portion of the bond issue each year.
Brand: Quizplus
Rating: 4.7 (52 reviews)

Question

Quizplus · Accepted Answer

A sinking fund is a provision in a bond indenture that requires the issuer to retire a portion of the bond issue annually. This provision ensures that the issuer sets aside money to repay the bondholders and reduces the risk of default.

A Sinking Fund Is a Requirement in the Bond Indenture