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Fixed Income Q20

0. Which of the following principal repayment structures allows for retirement of bond on an annual basis through a random drawing?

  • Option : B
  • Explanation : A sinking fund arrangement allows for the retirement of bond on an annual basis based on a random drawing. A serial maturity structure, a stated number of bonds mature and are paid off each year before final maturity. A term maturity structure allows for one lump sum payment at maturity.
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