Question: Would a bond be more or less desirable if you learned that it has a sinking fund that requires the company to redeem, say, 10%
Would a bond be more or less desirable if you learned that it has a sinking fund that requires the company to redeem, say, 10% of the original issue each year beginning in 2019, either through open market purchases or by calling the redeemed bonds at par? How would it affect your answer if you learned that the bond was selling at a high premium, say, 130% of par, or at a large discount, say, 70% of par?
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At the time a bond is issued a sinking fund is considered good by investors as it shortens the effec... View full answer
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