Parent Corporation Acquired Some of Its Subsidiary's Outstanding Bonds

question 92

Essay

Parent Corporation acquired some of its subsidiary's outstanding bonds. Why might Parent purchase the bonds, rather than the subsidiary buying its own bonds?

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Definitions:

Bank Reserves

The amounts of funds that a bank holds in its reserve account with the central bank or as cash in vault, to meet any sudden withdrawals.

Market Rate

The prevailing price or interest rate at which goods, services, or securities are bought and sold in a competitive marketplace.

Independence

Independence is the condition of a nation, country, or state which exercises self-governance, and sovereignty, over its territory.

Monetary Policy

This policy involves the management of a nation's money supply and interest rates by the central bank to control inflation, stabilize the currency, and achieve sustainable economic growth.