sinking fund
sinking fund
English Definitions:
sinking fund (noun)
a fund accumulated regularly in a separate account and used to redeem debt securities
Sinking fund
A sinking fund is a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entity. It helps keep the borrower liquid so it can repay the bondholder.
Sinking fund
A sinking fund is a fund established by an economic entity by setting aside revenue over a period of time to fund a future capital expense, or repayment of a long-term debt. In North America and elsewhere where it is common for public and private corporations to raise funds through the issue of bonds, the term is normally used in this context. However, in the United Kingdom and elsewhere where the issue of bonds (other than government bonds) is unusual, and where long-term leasehold tenancies are common, the term is only normally used in the context of replacement or renewal of capital assets, particularly the common parts of buildings. Borrowing money by issuing a bond is referred to as floating a bond. Sinking is its opposite, repaying debt or acquiring capital assets without debt.
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"sinking fund." Kamus.net. STANDS4 LLC, 2024. Web. 19 Apr. 2024. <https://www.kamus.net/english/sinking+fund>.
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