Consider the Following Situation: an FI Holds Two Assets in Equal

question 68

Multiple Choice

Consider the following situation: an FI holds two assets in equal proportions, these being liquid securities with a fair market value of $200 and housing loans with a fair market value of $800.Further assume that in case of immediate liquidation, the FI would receive $185 for its liquid securities and $700 for its housing loans.What is the FI's liquidity index (round to two decimals) ?

• A)I = (185/200) + (700/800) = 1.80
• B)I = (185/200) * (700/800) = 0.81
• C)I = 0.5 * (185/200) + 0.5 * (700/800) = 0.90
• D)I = [0.5 * (185/200)] * [0.5 * (700/800)] = 0.20

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Definitions:

Serotonin

A neurotransmitter that is involved in mood regulation, appetite control, and sleep among other physiological processes.

Stressful Environment

A situation or setting that causes significant anxiety, tension, or stress.

Optimistic

Having a positive or hopeful attitude towards the future, often with a confidence in successful outcomes.

Adverse Effects

Unintended, negative outcomes resulting from a medical treatment, medication, or intervention.