A sinking fund may be useful to a corporation because: A. the payments to the sinking fund are not necessary when the firm is in financial difficulty. B. it may provide the corporation with the option to acquire the bonds at the lower of face value or market price. C. the corporation does not have to worry about paying the bondholders. D. they are simple and easy to monitor.
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This is done by setting aside a certain amount of money regularly to pay off the debt or buy back bonds before they mature. Option A is incorrect because the payments to the sinking fund are necessary regardless of the firm's financial situation. The purpose of Show more…
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