A provision in which semiannual or annual contributions are made by a corporation into a fund administered by a trustee for purposes of debt retirement is referred to as a:
A)call provision.
B)put provision.
C)sinking-fund provision.
D)serial payment.

Question

Quizplus · Accepted Answer

The sinking-fund provision is when semiannual or annual contributions are made by a corporation into a fund administered by a trustee for purposes of debt retirement. The trustee takes the proceeds and goes into the market to purchase bonds from willing sellers. If no sellers are available, a lottery system may be used to repurchase the required number of bonds from among outstanding bondholders.

A Provision in Which Semiannual or Annual Contributions Are Made