sinking fund

Definition

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

Use sinking fund in a sentence

Many investors prefer investing in bonds that are backed by sinking funds because it reduces the organization's credit risk.

​ Was this Helpful? YES  NO 10 out of 10 people found this helpful.

Show more usage examples...

Featured Advertiser

Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
mandatory redemption schedule sinking fund call