Consider a financial institution with two assets: 10 percent of the portfolio in one-month Treasury bills and 90 percent in real estate loans. If the FI must liquidate its T-bills today, it receives $98 per $100 of face value; if it can wait to liquidate them at 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 $85 per $100 of face value, and liquidation at the end of one month will produce $93 per $100 of face value. What is the one-month liquidity index value for this FI's asset portfolio? Express your answer in decimals (not in percentage points) and round your answer to the nearest 2nd decimal.

Consider a financial institution with two assets: 10 percent of the portfolio in one-month Treasury bills and 90 percent in real estate loans. If the FI must liquidate its T-bills today, it receives $98 per $100 of face value; if it can wait to liquidate them at 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 $85 per $100 of face value, and liquidation at the end of one month will produce $93 per $100 of face value. What is the one-month liquidity index value for this FI's asset portfolio? Express your answer in decimals (not in percentage points) and round your answer to the nearest 2nd decimal.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter13: Other Financing Alternatives

Section: Chapter Questions

Problem 1bM

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