ECONOMICS
PUBLIC DEBT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Refunding
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Sinking fund
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Capital Levy
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All of the above
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Detailed explanation-1: -This method of debt redemption is similar to that of the sinking fund. Under this method, the fiscal authorities clear off a part of the public debt every year by issuing terminable annuities to the bond-holders which mature annually. Thus, it is the method of redeeming debts in installments.
Detailed explanation-2: -One of the best methods of redemption of public debt is sinking fund. It is the fund into which certain portion of revenue is put every year in such a way that it would be sufficient to pay off the debt from the fund at the time of maturity.
Detailed explanation-3: -Redemption means repayment of a loan. Refunding of debt implies the issue of new bonds and securities by the government in order to repay the matured loans. In the refunding process, usually short-term securities are replaced by issuing long-term securities.
Detailed explanation-4: -However, debt repudiation is not a method of solving debt redemption since it implies a rejection by the government to repay loans.
Detailed explanation-5: -Method # 1. Refunding: Method # 2. Use of Budgetary Surplus: Method # 3. Terminal Annuity: Method # 4. Sinking Fund: Method # 5. Debt Conversion: Method # 6. Statutory Reduction in the Rate of Interest: Method # 7. Additional Taxation: Method # 8. Capital Levy: More items