Sinking fund bonds: Multiple Choice Require equal payments of both principal and interest over the life of the bond issue. Requi

Question

1 year ago

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re the issuer to set aside assets to pay bonds at maturity. Are bearer bonds.

1 answer:

alexandr1967 [171] · Answer 1 · 2023-09-22T22:42:26+03:00

Require the issuer to set aside assets to pay bonds at maturity.

Bonds that require the issuer to set aside a pool of assets used only to repay the bonds at maturity.

<h3>What is Sinking Fund Bond ?</h3>

A sinking fund is maintained by companies for bond issues, and is money set aside or saved to pay off a debt or bond.

Bonds issued with sinking funds are lower risk since they are backed by the collateral in the fund, and therefore carry lower yields.

example may be a company issuing $1 million of bonds that are to mature in 10 years. Given this, it creates a sinking fund and deposits $100,000 yearly to make sure that the bonds are all bought back by their maturity date

Learn more about Sinking Fund Bond here:

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