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Estimate the liquidity index for securities

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Reference no: EM132417200

A DI has the following assets in its portfolio: $20 million in cash reserves with the Reserve Bank, $20 million in T-notes and $50 million in mortgage loans. If the assets need to be liquidated at short notice, the DI will receive only 99 per cent of the fair market value of the T-notes and 90 per cent of the fair market value of the mortgage loans. Estimate the liquidity index for these securities using the above information.

Reference no: EM132417200

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