23. Sinking fund provision Answer: e Diff: E
Statement a is false; sinking funds require companies to retire a certain portion of their debt annually. Statement b is true; if interest rates have declined, companies will call the bonds and investors will have to reinvest at lower rates. Statement c is true; if interest rates have risen (causing bond prices to fall) the company will buy bonds back in the open market. Statements b and c are true; therefore, statement e is the correct choice.
24 . Sinking fund provision Answer: d Diff: E
Statements a and c are correct; therefore, statement d is the correct choice. Bonds will be purchased on the open market when they are selling at a discount and will be called for redemption when the price of the bonds exceeds the redemption price.
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