Business / Taxes / Sinking Fund: To ensure there’s money on hand to redeem a bond or preferred stock issue, a corporation may establish a separate custodial account, called a sinking fund, to which it adds money on a regular basis. Or, the corporation may be required to establish such a fund to fulfill the terms of its issue. The existence of the fund allows the corporation to present its investments as safer than those issued by a corporation without comparable assets. However, sinking fund assets may be used to call bonds before they mature, reducing the interest the bondholders expected to receive.
Fund Noun Synonyms: finance, back, capitalize, stake, support, pay for, endow, grant, subsidize
Fund Adjective Synonyms: supply, stock, reserve, store, pool, cache, reservoir, repository, mine
Sinking Noun Synonyms: depressed, dejected, miserable, dolorous, doleful, mournful, forlorn, woeful, desolate, despairing, stricken, heavy-laden
Sinking Verb Synonyms: queasy, nervous, uneasy, tense, apprehensive, unquiet, fretful, shaky, jittery, jumpy, anxious
Business / Finance / Purchase Fund: Resembles a sinking fund, except that money is used to purchase bonds only if they are selling below their par value. MORE
Business / Finance / Prerefunding: Procedure of floating a second bond at a lower interest rate in order to pay off the first bond at the first call date and to reduce overall borrowing costs. MORE