Which of the following are true of a sinking fund?
I. It is kept for a stated purpose and a fixed date.
II. Money can be withdrawn from it at will.
III. It is built up by regular, usually equal, deposits.
IV. Money in an ordinary savings account, unlike a sinking fund, can be used at any time.

All four: I, II, III and IVCorrect answerYour answerI, III and IV onlyCorrect answerYour answerI and III onlyCorrect answerYour answerIII and IV onlyCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

A sinking fund has a purpose, a date and a deposit plan; a savings account has none of these restrictions.
II is false: the money stays until the date it is meant for.

Concept: A sinking fund against a savings account
Typical timeTypical: 120 s
Your timeYours: —

The rule this testsSinking funds

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Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

Which of the following are true of a sinking fund?I. It is kept for a stated purpose and a fixed date.II. Money can be withdrawn from it at will.III. It is built up by regular, usually equal, deposits.IV. Money in an ordinary savings account, unlike a sinking fund, can be used at any time.

Explanation

Which of the following are true of a sinking fund?
I. It is kept for a stated purpose and a fixed date.
II. Money can be withdrawn from it at will.
III. It is built up by regular, usually equal, deposits.
IV. Money in an ordinary savings account, unlike a sinking fund, can be used at any time.