Calculate the one-month liquidity index

Assignment Help Financial Management
Reference no: EM131826146

A DI has the following assets in its portfolio: $10 million in cash reserves with the Fed, $25 million in T-bills, and $65 million in mortgage loans. If the DI has to liquidate the assets today, it will receive only $98 per $100 of face value of the T-bills and $90 per $100 of face value of the mortgage loans. Liquidation at the end of one month (closer to maturity) will produce $100 per $100 of face value of the T-bills and $97 per $100 of face value of the mortgage.

Calculate the one-month liquidity index for this DI using the preceding information.

Reference no: EM131826146

Questions Cloud

What is the probability that it is banking or investment : Suppose we select one of these 25 companies at random. Given that the company is based in city? X, what is the probability that it is a banking or investment.
Sustainable growth rate is defined as maximum rate : The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions?
Response to the discussion - jumping to conclusions : Response to the discussion - JUMPING TO CONCLUSIONS - Does this mean that you can improve your life savings by spending more money?
What is the value of ending inventory using variable costing : Summit Manufacturing, Inc. produces snow shovels. The selling price per snow shovel is $30. What is the value of ending inventory using variable costing
Calculate the one-month liquidity index : Calculate the one-month liquidity index for this DI using the preceding information.
Calculate the full costing net income : Calculate the difference in full costing net income and variable costing net income without preparing either income statement
Create partial amortization schedule showing distribution : Determine the monthly payments hey make and create a partial amortization schedule showing the distribution of the first 6 payments as to interest and principal
Response to the discussion - correlation revelation : response to the Discussion - CORRELATION REVELATION - Discussion (CORRELATION REVELATION) Regression and Correlation are the most used and most abused tools
Interest is paid twice per year rather than once per year : What would the value be if the interest is paid twice per year rather than once per year?

Reviews

Write a Review

Financial Management Questions & Answers

  Planning your retirement and current expenditure

You have just inherited a large sum of money. You would like to make good use of your inheritance by putting it into an account that serves your retirement needs. You are planning your retirement and current expenditure. Therefore you don not withdra..

  Cash conversion cycle

What is Parramore's cash conversion cycle (CCC)? Its cost of goods sold is 80% of sales, and it finances working capital with bank loans at an 8% rate.

  Used in the dessert mix division

Laura Smith, the CFO of the dessert mix division, is evaluating an expansion opportunity and needs to determine the correct cost of capital for projects in her division. The cash flows of the dessert division have low total variability, but are the m..

  What constant rate is the stock expected to grow

Mitts Cosmetics Co.'s stock price is $35.62, and it recently paid a $1.50 dividend. This dividend is expected to grow by 30% for the next 3 years, then grow forever at a constant rate, g; and rs = 14%. At what constant rate is the stock expected to g..

  Decade of rapid growth-expected to remain at level in future

After a decade of rapid growth, the cash flows in last two years increased only at constant rate of 2%, and it is expected to remain at level in future.

  How much was the interest expense

Breads ‘R Us had sales of $35,000 last year. Their total costs were $12,000, and the depreciation charge was $3,000. They have 1,480 shares outstanding and paid dividend of $2.20 per share after keeping 70 percent of the net income as retained earnin..

  What is required rate of return on stock with beta

Assume that the risk-free rate is 6.5% and the required return on the market is 12%. What is the required rate of return on a stock with a beta of 1.5?

  What is the payback period for set of cash flows

What is the payback period for the following set of cash flows? Year Cash Flow

  Estimate exchange spot rate which will prevail in one year

given the market data which you have available to estimate the exchange spot rate which will prevail in one year?

  Making plans for retirement

You and your wife are making plans for retirement. You plan on living 25 years after you retire and would like to have $75,000 annually on which to live. Your first withdrawal will be made one year after you retire and you anticipate that your retire..

  Determine the cost of capital

The Floyd Company has employed you to determine its weighted average cost of capital. The net income is projected to be $504,545 during the coming year. The marginal tax rate is 40%. The firm’s beta is 1.5 Market: The expected return on the market is..

  Considering capital budgeting project

XYZ Corporation is considering a capital budgeting project that would require an initial investment of $440,000 and working capital of $32,000. The investment would generate annual cash inflows of $147,000 for the life of the project. Calculate the $..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd