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Answer: 40
**Correct Calculation:** - **Cash Inflows:** Deposit inflows (+70), Scheduled loan repayments (+80), Borrowings from money market (+60) - **Cash Outflows:** Deposit withdrawals (-30), Acceptable loan requests (-50), Operating expenses (-40), Stockholder dividend payments (-20), Repayment of bank borrowings (-30) **Net Liquidity Position:** -30 + 70 + 80 - 50 + 60 - 40 - 20 - 30 = 40 **Analysis of Incorrect Options:** - **A (-80):** Incorrect - likely flips the sign for borrowings from money market - **B (-20):** Incorrect - likely flips the sign for scheduled loan repayments and acceptable loan requests - **D (100):** Incorrect - likely flips the sign for repayment of bank borrowings **Key Concepts:** - **Cash Inflows** increase liquidity: deposit inflows, loan repayments, borrowings - **Cash Outflows** decrease liquidity: withdrawals, loan disbursements, expenses, dividend payments, debt repayments - Net liquidity position = Total inflows - Total outflows
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A treasurer at a small regional bank is assessing the bank's liquidity position. The treasurer estimates that the following cash inflows and outflows will occur in the next week:
| Cash Flows | Amount (USD million) |
|---|---|
| Deposit withdrawals | 30 |
| Deposit inflows | 70 |
| Scheduled loan repayments | 80 |
| Acceptable loan requests | 50 |
| Borrowings from money market | 60 |
| Operating expenses | 40 |
| Stockholder dividend payments | 20 |
| Repayment of bank borrowings | 30 |
Which of the following is the correct amount (in millions of USD), at the week's end, for the bank's net liquidity position?
A
-80
B
-20
C
40
D
100
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