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2 May, 04:32

Requires the firm to set aside an amount of money to trust periodically for the retirement of its preferred stock or the maturity of its bond.

a. protective provision

b. sinking fund provision

c. Sarbanes Oxley Act

d. callable provision

e. convertibility

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Answers (2)
  1. 2 May, 04:43
    0
    The correct answer is letter "B": sinking fund provision.

    Explanation:

    The Sinking Fund is a way for businesses to pay off part of their debt issue before they reach maturity. By slowly reducing its debt, the bond issuer is more likely to attract default risk investors. Firms paying their debts in advance reduce their interest rate expense and the possibility of facing financial hardship.
  2. 2 May, 04:52
    0
    The correct answer is b. sinking fund provision.

    Explanation:

    When a provision of funds is made, an expense is generally anticipated that will be incurred in the future. In this case, the company decided to anticipate making an appropriation of its bond titles in order to capitalize the withdrawal of its preferred shares that ensures a distribution of the money among the shareholders.
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