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if you have $100M and you need a $1M, you'd use your credit line and borrow $1M and pay it back from interests coming from $100M. it's not that different in cor
by halayli 1y ago
if you have $100M and you need a $1M, you'd use your credit line and borrow $1M and pay it back from interests coming from $100M. it's not that different in corp.
- jstanley 1y agoThat doesn't make any sense. You'll be paying a higher rate of interest on your loan than you're receiving on your cash. You'd be better off taking the $1m directly out of your cash pile.
- deleted 1y ago[deleted]
- binarymax 1y agoNot necessarily. You can get an interest rate lower than your investment return rate.
- YokoZar 1y agoWhen interest rates were particularly low years ago, we saw a large number of companies issuing bonds and then using the money to just do stock buybacks.
- _heimdall 1y agoThat depends heavily on the terms of the loan you can secure and how you choose to invest the cash. When you borrow $1M against $100M in cash or assets its generally considered a very low risk loan, meaning you'll likely get good terms and comparatively low rates.
- halayli 1y agoYou need to consider secured line of credit vs unsecured and the interest rate is significantly different as one is backed by collateral and the other is not.