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4. A bank is trying to measure its ability to quickly sell some securities if it runs into a liquidity problem. Given the following information,
4. A bank is trying to measure its ability to quickly sell some securities if it runs into a liquidity problem. Given the following information, calculate the immediate, one-week, two-week and one-month liquidity index for the banks securities.
| Dollar | Percent of face value received if sold | |||
Asset | Amount | Immediately | One week | Two weeks | One month |
Cash | 25 | 100 | 100 | 100 | 100 |
T-bills | 50 | 97.5 | 99 | 100 | 100 |
Corporate bonds | 65 | 95 | 97.5 | 98 | 99 |
Municipal bonds | 20 | 90 | 92.5 | 95 | 97 |
Mortgages | 90 | 80 | 88 | 93 | 97 |
Total | 250 |
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