If money is reserved each year to guarantee that a bond will be paid off at maturity, the money will be held in a ____ fund.
A) capitalization
B) sinking
C) compounding
D) retirement
E) redemption

Question

Quizplus · Accepted Answer

A sinking fund is a reserve fund where money is set aside annually to ensure that a bond will be paid off at maturity. This ensures that the issuer of the bond will have the necessary funds to meet their future financial obligations.

If Money Is Reserved Each Year to Guarantee That a Bond