Which of the following statements about sinking fund is NOT true? A Sinking fund provision facilitates the orderly retirement of the bond issue. B A company would prefer to use sinking fund to call bond if interest rate is below the coupon rate. C A company would use

Which of the following statements about sinking fund is NOT true? A Sinking fund provision facilitates the orderly retirement of the bond issue. B A company would prefer to use sinking fund to call bond if interest rate is below the coupon rate. C A company would use

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 8Q

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Concept explainers

Characteristics of Bonds

Question

Which of the following statements about sinking fund is NOT true?

	A	Sinking fund provision facilitates the orderly retirement of the bond issue.
	B	A company would prefer to use sinking fund to call bond if interest rate is below the coupon rate.
	C	A company would use sinking fund to call bond if interest rate is well above coupon rate.
	D	It is a good strategy for a firm to use its sinking fund to call bond if bond sells at a big premium.

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