Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rust Bucket Motor Credit Corporation (RBMCC), a subsidiary of Rust Bucket Motor, offered some securities for sale to the public on March 28, 2008. Under

image text in transcribed

Rust Bucket Motor Credit Corporation (RBMCC), a subsidiary of Rust Bucket Motor, offered some securities for sale to the public on March 28, 2008. Under the terms of the deal, RBMCC promised to repay the owner of one of these securities dollar 100, 000 on March 28, 2037, but investors would receive nothing until then. Investors paid RBMCC dollar 23,799 for each of these securities; so they gave up dollar 23,799 on March 28, 2008, for the promise of a dollar 100, 000 payment 29 years later. Based on the dollar 23,799 price, what rate was RBMCC paying to borrow money? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16)) Rate of return percentage Suppose that, on March 28, 2020, this security's price is dollar 42,080. If an investor had purchased it for dollar 23,799 at the offering and sold it on this day, what annual rate of return would she have earned? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16)) Annual rate of return percentage If an investor had purchased the security at market on March 28, 2020, and held it until it matured, what annual rate of return would she have earned? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16)) Annual rate of return percentage

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

DeFi And The Future Of Finance

Authors: Campbell R. Harvey, Ashwin Ramachandran, Joey Santoro, Vitalik Buterin, Fred Ehrsam

1st Edition

1119836018, 978-1119836018

More Books

Students also viewed these Finance questions