Freulia Inc

question 3

Multiple Choice

Freulia Inc. manufactures and sells stationery and office supplies. The firm begins to lose its competitive advantage with the entry of new competitors. In this case, in order to gain a sustainable competitive advantage, Freulia Inc. should:

• A)imitate the products of its competitors.
• B)depend on government subsidies.
• C)develop the skills and assets of the organization.
• D)aim at being the low-cost competitor in the industry.

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Definitions:

Interest Rate Risk Premium

The extra return investors demand for holding an interest-bearing asset, compensating them for the risk of interest rate fluctuations.

Coupon Rate

The annual interest rate paid by a bond expressed as a percentage of the bond's face value.

YTM

Yield to Maturity, the total return anticipated on a bond if held until it matures.

Premium Bonds

Bonds sold for more than their face value due to offering interest rates higher than the current market average.