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Pro Rata Sinking Fund
A sinking fund is a special account that finances the compulsory early repayment by a borrower of a certain amount of a bond issue, usually at par value, regardless of the current value of the bonds in the secondary market. A pro rata sinking fund forces each investor to give up an equal percentage of their bond holdings when the issuer calls for sinking fund retirement of the bonds. Typically only applied to registered securities.