A. The board shall negotiate the sale of all bonds of the city, in accordance with the provisions of the ordinance under which such bonds may issue, and shall, from time to time, invest the moneys which shall constitute the sinking fund for the redemption of the city debt or any surplus of interest to the credit of the interest fund, in the purchase of bonds issued by the city at the market price, not exceeding par value thereof. If at any time such investments cannot be made, then the board may invest such bonds in interest-bearing securities of the Aberdeen School District now known as District No. 5, the county of Grays Harbor, the state of Washington, of the United States.

B. Provided, the board may purchase bonds of the city at a premium whenever the interest accruing on said bonds, from time of purchase to maturity, will be greater than the premium on said bonds and interest on the amount to be used to make the proposed purchase.

C. The interest shall be computed at the average rate of interest earned by money in the sinking fund for the previous year, excepting the money that may be invested in bonds of the city and for the time that will elapse between the date of proposed purchase and maturity of the bonds.

D. No money belonging to the sinking fund or interest fund shall be loaned to any person or corporation.