Even though many bonds have deferred sinking funds, the sinking fund has the following effects on bondholders:I) provides extra protection to bondholders as both an early warning system and perhaps some collateral cash; II) provides an option to the firm to buy bonds at the lower of market or face value; III) puts the bondholders at added risk due to potential inability to meet sinking fund payments
A. III only
B. II only
C. I and II only
D. II and III only
Answer: C
Business
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