alleryStart learning →What does a sinking fund provision in a debt issue require of the debtor?
ASkip interest for some years
BPledge all its fixed assets
CConvert the debt into equity
DRepay part after a set period
Answer & Solution
Correct answer: D. Repay part after a set period
A sinking fund makes the debtor repay a part of the principal over time, which lowers the creditor's risk.
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