Sinking funds are devices used to force companies to retire bonds on a scheduled basis prior to their maturity.Many bond indentures allow the company to acquire bonds for a sinking fund by either purchasing bonds in the market or selecting the bonds to be acquired by a lottery administered by the trustee through a call at face value.

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Sinking funds are indeed used to retire bonds on a scheduled basis prior to their maturity, and many bond indentures allow companies to acquire bonds for a sinking fund either through market purchases or selection via lottery administered by the trustee at face value.

Sinking Funds Are Devices Used to Force Companies to Retire