A DI Has Two Assets: 50 Percent in One-Month Treasury

question 44

Multiple Choice

A DI has two assets: 50 percent in one-month Treasury bills and 50 percent in real estate loans.If the DI must liquidate its T-bills today, it receives $98 per $100 of face value; if it can wait to liquidate them on maturity (in one month's time) , it will receive $100 per $100 of face value.If the DI has to liquidate its real estate loans today, it receives $90 per $100 of face value liquidation at the end of one month will produce $92 per $100 of face value.The one-month liquidity index value for this DI's asset portfolio is

• A).973.
• B).940.
• C).979.
• D)1.06.
• E)1.10.

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Definitions:

Net Income

Net Income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, indicating the company's financial health.

Prepaid Expenses

Payments made for goods or services that will be received and used in the future, treated as assets on a balance sheet until used.

Financing Activity

This refers to the transactions and events that involve raising capital and repaying investors, such as issuing equity or debt.

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company pays out to its shareholders.