Which of the Following Statements Regarding Sinking Fund Provisions Is

Multiple Choice

Which of the following statements regarding sinking fund provisions is FALSE?

A) Sinking fund provisions usually specify a minimum rate at which the issuer must contribute to the fund.
B) With a sinking fund, instead of repaying the entire principal balance on the maturity date, the company makes regular payments into a sinking fund administered by a trustee over the life of the bond.
C) With a sinking fund, if a bond is trading at below its face value, because the bonds are repurchased at par, the decision as to which bonds to repurchase is made by lottery.
D) Because the sinking fund allows the issuer to repurchase the bonds at par, the option to accelerate the payments is another form of call provision.