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Determine which type of financial asset is described in each scenario. a. Calcb has developed a prototype garlic-peeling device that he hopes to sell to
Determine which type of financial asset is described in each scenario. a. Calcb has developed a prototype garlic-peeling device that he hopes to sell to the public. He is having his startup issue securities that offer buyers the promise to pay a specified amount of interest cach year plus the principal in five years. Cale is b. Audrey wants to buy a new car but does not have enough cash. She gets funding from her local bank with the promise that she will make monthly payments for the next three years to repay the original amount lent to her plus 6% interest. Audrey is c. Lyle and Shane start a business selling pencil sharpeners to elementary schools. Their company becomes an instant success, and they decide to allow people to start buying small shares of their company. This gives individuals who buy shares the right to vote in company decisions and a small percentage of the profits. Lyle and Shane are d. Rand Capital, a financial industry conglomerate, pools together several hundred home mortgages and sells shares in them to groups of investors. However, many investors decide against this option because of the risk involved and the difficulty of assessing the quality of such a large number of individual mortgages. Rand Capital is e. Jack decides to build a chateau in the mountains of Colorado and operate it as a ski resort. He secures funding from a Iocal commercial bank after discussing his business plan with the bank. He promises to pay back the principal plus interest
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