Question

In: Finance

A firm offered some securities for sale to the public on March 28, 2008. Under the...

A firm offered some securities for sale to the public on March 28, 2008. Under the terms of the deal, the firm promised to repay the owner of one of these securities $100,000 on March 28, 2038, but investors would receive nothing until then. Investors paid the firm $24,100 for each of these securities; so they gave up $24,100 on March 28, 2008, for the promise of a $100,000 payment 30 years later. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

  

Required:
a.

Based on the $24,100 price, the firm was paying a rate of percent to borrow money.

  

b.

Suppose that, on March 28, 2020, this security's price is $44,000. If an investor had purchased it for $24,100 at the offering and sold it on this day, she would have earned an annual rate of percent.

  

c.

If an investor had purchased the security at market on March 28, 2020, and held it until it matured, she would have earned an annual rate of percent.

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 9 months ago
Next > < Previous

Related Solutions

In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under...
In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $10,000 in March 2050, but investors would receive nothing until then. Investors paid DMF $3,500 for each of these securities; so they gave up $3,500 in March 2015, for the promise of a $10,000 payment 35 years later. a. Assuming you purchased the bond for $3,500, what rate...
In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under...
In March 2015, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $5,000 in March 2050, but investors would receive nothing until then. Investors paid DMF $1,500 for each of these securities; so they gave up $1,500 in March 2015, for the promise of a $5,000 payment 35 years later.    a. Assuming you purchased the bond for $1,500, what...
In March 2018, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under...
In March 2018, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $2,000 in March 2043, but investors would receive nothing until then. Investors paid DMF $900 for each of these securities; so they gave up $900 in March 2018, for the promise of a $2,000 payment 25 years later. a. Assuming you purchased the bond for $900, what rate...
1- On March 28, 2008, Toyota Motor Credit Corporation (TMCC), a subsidiary of Toyota Motor, offered...
1- On March 28, 2008, Toyota Motor Credit Corporation (TMCC), a subsidiary of Toyota Motor, offered some securities for sale to the public. Under the terms of the deal, TMCC promised to repay the owner of one of these securities $100,000 on March 28, 2038, but investors would receive nothing until then. Investors paid TMCC $24,099 for each of these securities; so they gave up $24,099 on March 28, 2008, for the promise of a $100,000 payment 30 years later....
Some of Tollakson Corporation’s investment securities are classified as trading securities and some are classified as available-for-sale.
Some of Tollakson Corporation’s investment securities are classified as trading securities and some are classified as available-for-sale. The cost and fair value of each category at December 31, 2017, were as follows.   At December 31, 2016, the Fair Value Adjustment—Trading account had a debit balance of $3,200, and the Fair Value Adjustment—Available-for-Sale account had a credit balance of $5,750. Prepare the required journal entries for each group of securities for December 31, 2017.
On the day after Thanksgiving, November 28, 2008, Walmart held a nationwide sale of a limited...
On the day after Thanksgiving, November 28, 2008, Walmart held a nationwide sale of a limited number of sharply discounted televisions, computers, and video game sets. The “blitz sale” had been advertised heavily in newspapers and on television. At the Valley Stream Wal-Mart store in Long Island, New York, 2,000 shoppers lined up hours before the scheduled 6:00 a.m. store opening, forming a line at a place marked by a handwritten sign: Blitz Line Starts Here. The crowd became unruly...
Securities held-to-maturity, securities available for sale, and trading securities Amalgamated General Corporation is a consulting firm...
Securities held-to-maturity, securities available for sale, and trading securities Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities intending to earn profits on short-term differences in price. The following selected transactions relate to Amalgamated’s investment activities during the last quarter of 2016 and the first month of 2017. The only securities held by Amalgamated at October 1 were $30 million of 10% bonds...
Securities held-to-maturity, securities available for sale, and trading securities Amalgamated General Corporation is a consulting firm...
Securities held-to-maturity, securities available for sale, and trading securities Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities intending to earn profits on short-term differences in price. The following selected transactions relate to Amalgamated’s investment activities during the last quarter of 2016 and the first month of 2017. The only securities held by Amalgamated at October 1 were $30 million of 10% bonds...
6. On March 28, 2008, Toyota Motor Credit Corporation (TMCC), a subsidiary of Toyota Motor,      ...
6. On March 28, 2008, Toyota Motor Credit Corporation (TMCC), a subsidiary of Toyota Motor,       offered some securities for sale to the public. Under the terms of the deal, TMCC promised to          repay the owner of one of these securities $100,000 on March 28, 2038, but investors would       receive nothing until then. Investors paid TMCC $24,099 for each of these securities; so they       gave up $24,099 on March 28, 2008, for the promise of a...
A company recently completed its Initial Public Offering (IPO). The shares were offered for sale at...
A company recently completed its Initial Public Offering (IPO). The shares were offered for sale at $40 each. On the first day of trading on the stock exchange the share price was $64.35. Why weren't the shares offered for sale at a higher price?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT