What is Sinking Fund?

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Sinking Fund:


A fund into which a company positions aside money over time, in order to leave its preferred stock, bonds or debentures. A fund into which a company positions away money over time, in order to leave its preferred stock, bonds or debentures. In the case of bonds, incremental payments into the sinking fund can often the financial impact at maturity. sponsor prefer bonds and debentures backed by sinking funds because there is less risk of a default.

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