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Question 1 - Why would they do this (renew a 15 month 8% with a new 15 month 8% repeatedly every 3 months)?

Per FAQ they intend to do this to give the client added liquidity. I assume if their credit rating dropped they would extend beyond 3mo as capital would be more expensive to borrow.

Question 2 - If the interest rate they can get rises to 8.25% at some point, why would they do this?

Not sure I understand your point, why would they want to pay out a higher rate of return of 8.25%, this would cost them more money ?

Question 3 - Why does the S&P rate them at BBB- if they have such consistent ability to pay their debt? What do they know that we do not?

They do not have much debt vs. assets. but I think there trading firm is higher risk than most traditional businesses.

per S&P
�� Business concentration in options market trading
�� Earnings are highly volatile
�� Low equity market volatility can significantly reduce earnings

Question 4 - Why does your brokerage have to "sell" this to you? If it is so good, wouldn't it already be snapped up by their best customers? (Are you one of their best customers?)

The offer is limited to a select pool, and yes I do quite a bit of business with them. I know historically owner shuns working with traditional bankers. Also the faq claims they do not want to spend extra fees on investment banking and the offer helps builds relationship with their retail clients. (obviously if they default the outcome will be very different..)

Question 5 - What is the priority of this debt?

"senior unsecured obligations and will rank equally with all other unsectured indebtedness"

Question 6 - When they reissue every 3 months, are the amounts increasing or remaining about the same? If they are increasing, can you be sure that they aren't using this ever increasing debt to remain afloat?

no it has consistently been 50 mill ea offering.

Also, thank you Bill for the advice to limit exposure when considering an individual issuer. I will take this into account.
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