Purchase Fund

A feature of some bond indentures and preferred stock that requires the issuer to make an effort to purchase a specified amount of securities if they fall below a stipulated price (usually par value).

A purchase fund is similar to a sinking-fund provision. It can be an advantage to investors if the fund is trading below par value, because the company must pay par to repurchase the bonds.


Investment dictionary. . 2012.

Look at other dictionaries:

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  • Purchase fund — Resembles a sinking fund except that money is used only to purchase bonds if they are selling below their par value. The New York Times Financial Glossary * * *    A borrower uses a purchase fund to buy back issued bonds in the secondary market… …   Financial and business terms

  • purchase fund — A fund used to purchase bonds that have fallen below par value …   Big dictionary of business and management

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  • sinking fund — Cash set aside under restricted conditions as required by the terms of certain types of debt. See sinking fund bonds ( sinkers). American Banker Glossary A fund to which money is added on a regular basis that is used to ensure investor confidence …   Financial and business terms

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