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Savvy investors could identify a trend involving a particular currency and earn enough return to pay for the original purchase and realize a profit as well.For example, the currency investor could buy a given currency while it is relatively weak, hold onto it until it becomes strong, and then sell it for a substantial profit over the original investment.From that point forward, both projects would be able to remain self-sustaining and even earn additional profits that could be used to fund other municipal projects.The same basic concept applies in terms of residential real estate.Self-liquidating loans are not always a good credit choice.
During the busy season when business is booming the company needs to borrow money to finance short-term assets such as inventory and accounts receivable.
A business might use a self-liquidating loan (or assets) to purchase extra inventory in anticipation of the holiday shopping season.
The revenue generated from selling that inventory would be used to repay the loan.
For example, a company may issue a self-liquidating bond to pay for its inventory, which it intends to quickly sell.
It is called a self-liquidating bond because the proceeds from the sale of the assets provide the capital with which the issuer may repay the bond.There are a number of examples of this type of investment activity, ranging from municipal projects to real estate.One example of a self-liquidating asset would be the construction of a building or toll bridge for use in a city or town.These loans are intended to finance purchases that will quickly and reliably generate cash.