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Author Question: Which statement regarding sinking funds is true? (Read 23 times)

campbellfam07

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on: Aug 7, 2023
Which statement regarding sinking funds is true?

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If interest rates increase after a company has issued bonds with a sinking fund, the company will be less likely to buy bonds on the open market to meet its sinking fund obligation and more likely to call them in at the sinking fund call price.


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Most sinking funds require the issuer to provide funds to a trustee, which saves the money so that it will be available to pay off bondholders when the bonds mature.


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On balance, bonds that have a sinking fund are risker than those without such a provision, so sinking fund bonds are issued with higher coupon rates.


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Sinking fund provisions sometimes can work to the detriment of bondholders, and this is most likely to occur if the yields on similar bonds decrease after the bond has been issued.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by campbellfam07 on Aug 7, 2023

dsfhkjdfaskjfdsjk

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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campbellfam07

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

amcvicar

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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