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vaieri [72.5K]
3 years ago
5

Q 1.31: Nathaniel and Hosea have both invested $25,000 in businesses. Now they both want to sell out and recoup their money. If

Nathaniel invested in a corporation and Hosea invested in a partnership, which of them is going to have the MOST difficulty selling their investment? Why?
Business
1 answer:
hjlf3 years ago
3 0

Answer:

Hosea

Explanation:

Selling the investment in a corporation can be much easier as the stock brokers can help with a lot of alternative ways of disposing it.This investment can even be sold to other large investors ,smaller investors or other employees.

Selling an investment will be more difficult as the size of investment is somehow high , and getting someone that will be willing to invest such an amount might just be difficult.

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The yield to maturity simply refers to the total return that is expected on a bond as long as the bond is held till it matures.

In this case, since the investor is indifferent between this municipal bond and an otherwise identical taxable corporate bond, the yield to maturity of the corporate bond will be:

4.83% = Corporate bond YTM × ( 1- 35%)

4.83% = Corporate bond YTM × 65%

Corporate bond YTM = 4.83% / 65%

Corporate bond YTM = 0.0483/0.65

Corporate bond YTM = 7.43%

The yield to maturity of the corporate bond is 7.43%

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