A Bond Sinking Fund Provision Requires a Firm To

Multiple Choice

A bond sinking fund provision requires a firm to:

A) issue bonds every year to finance interest payment on bonds.
B) retire a portion of the bond issue each year.
C) increase the coupon rate by one percent every year.
D) use annual interest payments for the repayment of bonds.
E) gradually reduce the face value of debt to the level of market value of debt.