Appraisal Economics Inc. has completed the valuation of several auction rate securities for a publicly traded firm in the digital media industry. Auction rate securities offered borrowers long-term financing and had provided investors with short-maturity assets with yields generally above those offered by money market funds or commercial paper. In 2008, when the credit markets began to experience severe dislocations, the demand for these once liquid securities disappeared and many current investors were unable to sell their existing holdings. Despite the limited availability of transactions from which to derive estimates of fair value, institutional investors are required to periodically mark their holdings to market. We valued these securities to facilitate the client’s quarterly SEC reporting requirements.
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