Based on the maturity of the financial instrument

Assignment Help Financial Management

Reference no: EM131487660

A hedge fund “ABC” has the following assets:

Asset Value Asset Value

Cash 100 Stocks 2000

Treasury Bills 100 Checkable Deposits 100

Asset-backed Commercial Papers (ABCP) 2000 Agency Mortgagebacked securities (Agency MBS) 2000

Fixed Assets 2000 Time Deposits 500

a. Based on the maturity of the financial instrument, which above items belong to the money market? Which items are in the capital market?

b. Based on the liquidity, which items are in M1? Which items are in M2?

c. Let “highly liquid” be the category including all items in M2 as well as all the financial instruments in the money market, plus agency MBS.

Assume that short-term debt of this company is 4000. Does this company have enough liquidity? Explain in detail.

d. Assume ABCP and agency MBS are suddenly not considered as liquid assets anymore (due to the financial crisis), does this company have enough liquidity to pay its short-term debt? Explain in detail.

Reference no: EM131487660

Questions Cloud

The price and earnings multiple for the typical firm : The Price/Earnings multiple for the typical firm in the construction industry is 12.

Determine whether to switch to electronic payment : ACD, Inc. a computer parts company, presently pays its largest supplier by check and is trying to determine whether to switch to electronic payment.

Bonds for some much-needed expansion projects : BDJ Co. wants to issue new 22-year bonds for some much-needed expansion projects.

Calculate the price of a european put option : Calculate the price of a European put option with a six-month expiration and a strike price of $30.

Based on the maturity of the financial instrument : Based on the maturity of the financial instrument, which above items belong to the money market? Which items are in the capital market?

Loan-how much principal was paid during the three years : What is the monthly payment? How much principal was paid during the three years?

What is z-primes stock price : Company Z-prime’s earnings and dividends per share are expected to grow by 3% a year. What is Z-prime’s stock price?

What is the target stock price in one year : Fly Away, Inc., has balance sheet equity of $6.5 million. what is the target stock price in one year?

Compliance auditing involves testing and reporting : Compliance auditing involves testing and reporting on whether an organization has complied with the requirements of various laws, regulations and agreements.

User Account

All Pages