Editing Sinking fund (section)

===Types===
A sinking fund may operate in one or more of the following ways:
# The firm may repurchase a fraction of the outstanding bonds in the open market each year.
# The firm may repurchase a fraction of outstanding bonds at a special call price associated with the sinking fund provision (they are [[callable bond]]s).
# The firm has the option to repurchase the bonds at either the market price or the sinking fund price, whichever is lower. To allocate the burden of the sinking fund call fairly among bondholders, the bonds chosen for the call are selected at random based on serial number. The firm can only repurchase a limited fraction of the bond issue at the sinking fund price. At best some indentures allow firms to use a ''doubling option'', which allows repurchase of double the required number of bonds at the sinking fund price.
# A less common provision is to call for periodic payments to a trustee, with the payments invested so that the accumulated sum can be used for retirement of the entire issue at maturity: instead of the debt [[Amortization (accounting)|amortizing]] over the life, the debt remains outstanding and a [[Matching principle|matching]] asset [[accrue]]s. In this way a fund is built up with the intention of paying off the debt in full at a specified future date instead of directly paying the debt down over time. This method was popular in the 1980s-90's in the UK household [[Endowment mortgage|mortgage]] market.