17-74 a DI Has Two Assets: 50 Percent in One-Month

question 62

Multiple Choice

17-74 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:

Statement of Comprehensive Income

A financial report that includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, dividing activities into operating, investing, and financing.

Retained Earnings Statement

A summary of the changes in the retained earnings in a corporation for a specific period of time, such as a month or a year.

Fair Value

The estimated market value of an asset or liability, based on current prices in an active market.