Question: On March 28, 2008, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to
On March 28, 2008, 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 $100,000 on March 28,2028 , but investors would receive nothing unti then. Investors paid DMF $24,299 for each of these securities; so they gave up $24,299 on March 28,2008 , for the promise of a $100,000 payment 20 years later. (a) Based on the $24,299 price, what rate was DMF paying to borrow money? (b) Suppose that, on March 28, 2018, this security's price is $39.783. If an imvestor had purchased it for $24,299 at the oflering and sold it on this day, What annual rate of retum would she have eamed? (c) If an investor had purchased the security at market on March 28,2018 , and held it until it matured, what annual rate of return would she have earned
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