The requirement of certain amount of issued bond that must be retired every year is classified as __________?
Correct answer: C. sinking fund provision
- A. sinking fund discount
- B. sinking fund premium
- C. sinking fund provision
- D. floating fund provision
Explanation
A sinking fund provision requires the issuer to set aside funds or retire a specified portion of a bond issue periodically, often each year. This gradually reduces the outstanding debt before final maturity.
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