Sinking Fund

Debenture Redemption Reserve
A capital reserve created to ensure that funds are available for the redemption of debentures at maturity, limiting profits available for distribution but not providing actual redemption funds directly.
Debt Retirement
Debt retirement refers to the repayment of outstanding debt, which is often achieved through mechanisms such as sinking funds, amortization, or prepayment. It is essential for managing corporate and personal finance efficiently.
Debt Service
Debt service refers to the cash required in a given period, usually one year, for payments of interest and current maturities of principal on outstanding debt. This includes obligations from mortgage loans, corporate bond issues, and government bonds. Understanding debt service is crucial for assessing the financial stability and repayment ability of an individual or entity.
Debt Service Coverage
Debt service coverage is a critical financial metric used in corporate, government, personal, and real estate finance to measure the availability of cash flow for meeting annual debt obligations.
Funded Debt
Funded debt refers to debt that is due after one year and is formalized by the issuing of bonds or long-term notes. It often involves a sinking fund to ensure the debt can be retired systematically.
Indenture
An indenture is a formal agreement, also known as a deed of trust, between an issuer of bonds and the bondholder which outlines key considerations such as the form of bond, amount of issue, property pledged, protective covenants, working capital requirements, and redemption rights.
Sinking Fund
A limited reserve set aside systematically by an issuer over time to repay debt or to replace an asset in the future.
Treasury Bond
A Treasury Bond (T-Bond) is a long-term debt instrument issued by the U.S. government, as well as a term for bonds bought back by corporations.
Yield to Average Life
Yield to Average Life (YAL) is a calculation used to estimate the expected return of a bond, assuming that parts of the bond issue are retired systematically prior to its final maturity date. This is common in cases where a sinking fund is involved.

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