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borrow $10,000 at 6.4% fixed interest over 3 years

buy 3 year convertible notes paying 8.075% at current prices but missing first interest 6 monthly payment

write interest gained off against interest paid
total cost over 3 years $175.00

2 worst case scenarios
No 1)company goes bust - loss equals $10,000 - very,very unlikely and if I thought it was a possibility I wouldn't be in it.
No 2)stock price falls 15%+ in next 3 years - have to take cash instead of converting to shares - recieve $8500 = loss of $1500 plus the $175.
Loss is capped because of set value of notes.

more likely scenarios
somewhere between
No 1) roundabout current price = roundabout breakeven
No 2)60% stock price rise (not unlikely because of current undervaluation in my opinion) = profit of about $6800 = total return of
3800%
No 3) wishful thinking - not outside the realms of possibility - 130% stock price rise = profit of $13500 for an outlay of $175 = a total return of 7700%.


Any one else doing this sort of thing?
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Barcoo
That's very, very good thinking !!
The key to it is this -
borrow $10,000 at 6.4% fixed interest over 3 years
Can you secure a loan for this long at this rate ?? - I haven't followed the loan market for a while but the prediction is this side of the Tasman is that there will be a one possibly two percent interest rate rise this year.
Regards
Harmy

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Already done it Harmy
6.4% interest only - fixed 3 years- pay capital back in 3 years.
Supplementary loan - house as collateral.
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Sorry a couple of minor corrections

total cost over 3 years $175.00
should be -total cost over 3 years $126

which makes
No 2)60% stock price rise (not unlikely because of current undervaluation in my opinion) = profit of about $6800 = total return of 3800%
No 3) wishful thinking - not outside the realms of possibility - 130% stock price rise = profit of $13500 for an outlay of $175 = a total return of 7700%.


into

-No 2)60% stock price rise (not unlikely because of current undervaluation in my opinion) = profit of about $6800 = total return
of 5300%
No 3) wishful thinking - not outside the realms of possibility - 130% stock price rise = profit of $13500 for an outlay of $126 =
a total return of 10700%.
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Already done it Harmy
6.4% interest only - fixed 3 years- pay capital back in 3 years.
Supplementary loan - house as collateral.


Barcoo
Good one - you can't go wrong !!
Regards
Harmy
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Well actually I can, but I like the odds.
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