Sinking Fund Cash would be classified on the balance sheet as （)A. a current assetB.

Which statement regarding sinking funds is least likely correct？

A. Sinking fund provisions require the retirement of a portion of a bond issue in specified amounts prior to the maturity date.

B. Sinking fund redemptions can be accomplished by making cash payment to the trustee who will then retire the required proportion of the bonds.

C. If rates have declined since the bond was issued, companies are likely to choose to retire a proportion of the debt through the delivery of securities.

A.firms must establish a cash fund for future bond redemption.

B.bondholders always benefit, because principal repayment on the scheduled maturity date is guaranteed.

C.bondholders may lose because their bonds can be repurchased by the corporation at below-market prices.

D.both A and B are true.

E.none of the above is true.

Which of the following provides the most flexibility for the bond issuer？

A. Put provision

B. Call provision

C. Sinking fund provision

Which of the following provides the mostprotection to a bondholder？

A. Call protection.

B. Refunding protection.

C. Sinking fund protection.

Which of these embedded options most likelybenefits the investor？

A. The floor in a floating-rate security

B. An accelerated sinking fund provision

C. The call option in a fixed-rate security

Debt covenants to protect bondholders areleast likely to:

A.restrict the issuance of new debt.

B.require sinking fund redemptions.

C.prohibit bond repurchases at a premium to par.

Which embedded option is most beneficial to a bond issuer？

A. A conversion privilege.

B. A floor on a floating rate bond.

C. An accelerated sinking fund provision.

A.The accelerated sinking fund provision favors the issuers.

B.The conversion provision favors the bondholders.

C.The option-adjusted spread measures the spread, including the effect of the embedded option.