When the Required Return Is Constant but Different from the Coupon

question 3

Multiple Choice

When the required return is constant but different from the coupon rate, the price of a bond as it approaches its maturity date will ________.

• A) remain constant
• B) increase
• C) decrease
• D) approach par

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Definitions:

Multinational Companies

Corporations that operate in multiple countries outside of their original or home country.

Sophisticated Technologies

Advanced and highly developed technologies that often offer superior performance, efficiency, or capabilities compared to more conventional technologies.

Greenfield Operation

The process of building a new business or facility from scratch in an area where no previous facilities exist, often in a foreign market.

Subsidiary Company

A company that is controlled by another company, known as the parent company or holding company.