Fin534 week 3 discuccion | Business & Finance homework help
For bondholders, a sinking fund provides greater assurance that their investments will be repaid when due while also allowing them to earn interest on these funds over time. However, this setup requires bondholders to bear more risk as they cannot liquidate their holdings without incurring early redemption penalties – something which is not always easy or feasible for certain individuals.
Overall having an understanding of how sinking funds function from both perspectives can be extremely helpful for financial managers as it enables them to make well-informed decisions on whether or not this type of arrangement is suitable for the company and its investors.