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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

Are securities that provide for a sinking fund more or less risky from the bondholder’s perspective than those without this type of provision? Explain.

Summary Introduction

To explain: Whether the securities that are provided for a sinking fund are more or less risky from the perspective of bondholder than those without sinking fund.

Introduction:

Sinking Fund: Sinking fund refers to the investment made by the issuer of the debt instrument annually, which is used to redeem bonds at maturity.

Explanation
  • Sinking fund is a fund in which firm invest a fixed amount every year to utilize those funds in repayment of the bonds at maturity.
  • Securities without sinking fund provision are...

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