Are Bonds with a Sinking Fund Provision Risky for Bondholders?

1 FINANCE MCQS

From a bondholder’s point of view, bonds issued with a sinking fund provision are considered ____________?

Floating risk discount
Less risky
More risky
Floating risk premium

Correct Answer: B. Less risky

Detailed Explanation

Bonds with a sinking fund provision are considered less risky for bondholders because the issuer is obligated to retire a portion of the debt periodically, reducing default risk over time.

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From a bondholder’s point of view, bonds issued with a sinking fund provision are considered ____________?

From a bondholder’s point of view, bonds issued with a sinking fund provision are considered ____________?

Detailed Explanation

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In cash flow analysis, two projects are compared using a common life approach, which is classified as…

In capital budgeting, the Internal Rate of Return (IRR) of a project is classified as its ____________?…

In evaluating independent projects, the results of Internal Rate of Return (IRR) and Net Present Value…