Back-To-Back Letters Of Credit
Drastic times call for drastic measures. You saw an ad selling two DeLoreans on Craigslist that you know your friend's high-end car rental company, Viva los DeLoreans, located in Chile, would buy in an instant. What should you do?
Be the middleman. Broker the deal.
You arrange a loan here in the U.S. to buy these two DeLoreans with the seller getting the dough. Your friend in Chile goes to his bank and gets a loan to buy the two cars from you. That process is obtaining back-to-back letters of credit with the intent of easing the level of risk for any one party. And if done right, you, the middleman, get a bit of dinero in the deal to make it worthwhile.
Related or Semi-related Video
Finance: What is an Accredited Investor?9 Views
Finance a la Shmoop. What is an accredited investor. Well the difference
between an accredited college and an unaccredited college, can be like you
know the difference between Princeton, and the school of Feel Good Energy, that
your great Aunt Bertha, set up in her garage last year. Yeah different kind of [woman dancing in garage with disco ball]
college. Well accredited investors work on a
similar idea. A bunch of someone's have come along and agreed that accredited
investors, have a bunch of qualifications. In other words they're legit. So
accredited investors are simply investors, who qualify to do a certain
investment. Usually accredited means, that they have credit, or assets, or wampum, or
knowledge, like intellectual capital, instead of financial capital, or along with
both. Which means that they're big boys and big girls, who are able to invest a
large amount of money, in a risky venture. Officially they're investors who have an
income of at least $200,000 for the past two years, three hundred thousand for [checklist for investors on chalkboard]
joint accredited investors, like married people or partners, or have a net worth
of at least a million bucks individually, or jointly, or our executives, partners, or
directors of the entity issuing those securities. Meaning raising the dough
itself. Institutional investors, such as mutual funds, hedge funds, and pension
funds, also fit the bill. Additionally entities can be considered
accredited, but their threshold is 5 million bucks in assets. By the way if [man talking on lawn]
all the owners of an entity, like a law firm or something like that, are
accredited, well then the entity is considered accredited
as well. So yeah they're accredited investors. Not to be confused with a
credited investor, who is really excited to have a small part in a movie. [guy in movie theater]
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