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Toyota Motor Credit Corporation (TMCC), a subsidiary of Toyota Motor, offered some securities for sale to the public on 28 March 2008. Under the terms
Toyota Motor Credit Corporation (TMCC), a subsidiary of Toyota Motor, offered some securities for sale to the public on 28 March 2008. Under the terms of the deal, TMCC promised to repay the owner of one of these securities RM100,000 on 28 March 2038 , but investors would receive nothing until then. Investors paid TMCC RM24,099 for each of these securities; so, they gave up RM24,099 on 28 March 2008 for the promise of a RM100,000 payment 30 years later. (i) Based on the RM24,099 price, what rate was TMCC paying to borrow money? (ii) Suppose that, on 28 March 2019, this security's price is RM42,380. If an investor had purchased it for RM24,099 at the offering and sold it on this day, what annual rate of return would she have earned? (iii) If an investor had purchased the security at market on 28 March 2019, and held it until it matured, what annual rate of return would she have earned
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