Question
An FI has two assets: 10 percent in one-month Treasury bills and 90 percent in real estate loans. If the DI must liquidate its T-bills
An FI has two assets: 10 percent in one-month Treasury bills and 90 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 months time), it will receive $100 per $100 of face value. If the DI has to liquidate its real estate loans today, it receives $85 per $100 of face value, and liquidation at the end of one month will produce $95 per $100 of face value. What is the one-month liquidity index value for this DIs asset portfolio? Please put your answer in decimals (not in percentage points) and round your answer to the nearest 2nd decimal.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started