The requirement of certain amount of issued bond that must be retired every year is classified as __________?
Correct answer: A. sinking fund provision
- A. sinking fund provision
- B. sinking fund premium
- C. sinking fund discount
- 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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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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