Question

Mill enterprises needs to raise a large amount of money. To raise the money, it sells its fractional interest in orange groves, located in Florida, to Sunshine Co. in New York. Sunshine Co. would be ensured a return in investment from the land purchased. Mill enterprises has sold:

1) real estate
2) debt instruments
3) goods
4) securities

Answer 1

Mill Enterprises has sold securities to Sunshine Co. by offering a fractional interest in Florida orange groves. These securities represent an investment promising a return, allowing Mill Enterprises to raise capital from interested investors.

Step-by-step explanation:

When Mill Enterprises sells its fractional interest in orange groves to Sunshine Co., ensuring a return on investment for the land purchased, it has sold securities. In doing so, they are selling an investment product that signifies an ownership position, or equity, in the company, or creditor relationship with the company in the case of bonds. Firms often look for external sources of financial capital to facilitate growth, expansion, or other investments. They may do this through various means, such as selling shares of stock or issuing bonds. Both of these are examples of securities, which can be sold to investors in exchange for capital that provides a return on their investment. These financial instruments are essential because they allow companies that need financial capital, like the fictitious Mill Enterprises or real-life companies, to connect with investors willing to provide that capital in hopes of earning a return. The investors, in this case represented by Sunshine Co., receive rights to future profits or cash flows deriving from the land or from the company's broader operations if the company thrives thanks to this influx of capital.