Question

What is true of a sinking fund?        A. It requires one lump sum payment at the beginning.   B. It's not really an annuity.   C. It doesn't compound its money.   D. It aids in meeting a future obligation.

Answer 1

D. It aids in meeting a future obligation

Step-by-step explanation

I believe sinking fund is a way used by companies to pay off borrowed money by using a bond issue through payments made periodically before it matures. This means is used by companies to settle future loan repayment agreements that it made with lending agencies. Company uses sinking fund technique to entice investors because the fund convince stakeholders of the firm on issues of default payment