Calculating Rates of Return Referring to the TMCC security we discussed at the very beginning of the chapter:

a. Based on the $1,163 price, what rate was TMCC paying to borrow money?

b. Suppose that, on April 21, 2015 this security’s price is $2,500. If an investor had purchased it for $1,163 at the offering and sold it on this day, what annual rate of return would she have earned?

c. If an investor had purchased the security at market on April 21, 2015, and held it until it matured, what annual rate of return would she have earned?