Explanation:
In a normal market, the liquidation cost is calculated using the half-spread applied to the quantity of the asset.
For the shares:
$90.8, Offer (Ask) = $92.4$92.4 - $90.8 = $1.60$1.60 / 2) = $20,000,000For the commodity:
$24.0, Offer (Ask) = $26.2$26.2 - $24.0 = $2.20$2.20 / 2) = $38,500,000Total Liquidation Cost = $20,000,000 + $38,500,000 = $58,500,000 (or $58.5 million).
Option B ($58.49 million) is the closest answer and effectively matches $58.50 million, accounting for minor rounding differences in standard multiple-choice conventions.
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Q.72 Suppose that the liquidity division in QPR bank has bought 25 million shares of one company and 35 million ounces of a commodity. Assume that the shares are bid $90.8, offer $92.4, and the commodity is bid $24, offer $26.2. Calculate its liquidation cost in a normal market.
A
$45.67 million
B
$58.49 million
C
$23.56 million
D
$32.08 million
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