No deal. I loaned Shane the dough at a higher interest rate and I'm not going to take a $5 haircut today 'cause I've got Sabri making sure Shane will pay me in full next week.
Now if Jim wants to offer $115, fine. But I take it he will want some assurance that Sabri will still beat Shane up if Shane doesn't pay HIM. So maybe Jim should pay me $114 and make a side payment of a couple a bucks to Sabri to keep him in the loop. All the resale market does is let me liquidate the asset before maturity. It doesn't have any effect on the value at maturity. Now if I hear through the grapevine that Max has a contract out on Shane and Shane's not likely to be around next week to either pay OR get beaten up, then maybe I'll jump at Jim's $105 offer. This loan sharking business is more trouble than I expected! On Thu, Oct 27, 2011 at 4:36 PM, Sabri Oncu <sabri.o...@gmail.com> wrote: > > Here's some numbers: Shane borrows $100 from Sandwichman and agrees to > pay > > back $120 in a week. But Sandwichman is uncertain that Shane will pay > back > > the loan. So Sandwichman he pays a ten dollar retainer fee to Sabri who > will > > beat Shane up if he doesn't pay Sandwichman the [$120] he owes him. Shane > now > > has an asset worth $100 but owes Sandwichman $120. Sandwichman has an > asset > > worth $110 because.he paid a retainer to Sabri. Sabri has an asset worth > > $10. Is Shane's $120 debt equal to Sandwichman's $110 asset? Does X + $10 > = X? > > Very complicated and possibly there are some calculation mistakes > (easily correctible) but, what if the interest rates moved down today > so much so that now Jim is willing to pay $105 to buy Shane's $120 > debt that will mature in a week from you, keeping in mind my retainer > fee of $10? > > Are we marking to book or to market or to model or to fantasy? That > is, what is the current value of Shane's debt, whatever value means? > Obviously, it was $100 initially when you gave him $100, but what is > it now after the significant down move in the interest rates? > > Best, > Sabri > _______________________________________________ > pen-l mailing list > pen-l@lists.csuchico.edu > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Sandwichman
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