Which of the following statements concerning the use of sinking funds to repurchase a bond issue is NOT true?
A) A firm should make regular payments into a sinking fund administered by a trustee over the life of the bond.
B) A firm can reduce the amount of outstanding debt without affecting the cash flows of the remaining bonds.
C) Payments from the sinking fund are used to repurchase bonds.
D) Bonds can be issued with a sinking fund provision or a call provision, but not both.
Correct Answer:
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