1. Which of the following could hurt the liquidity position of a financials institution?
a) selling loans held on the balance sheet in the secondary market
b) replacing treasuries with A-rated corporate bonds
c) issuing additional equity
d) issuing subordinated debt
2. Which one of the following statements concerning net present value is correct?
Any project that has negative cash flows for any time period after the initial investment should be rejected.
An investment should be accepted if, and only if, the NPV is exactly equal to zero.
An investment should be accepted if the NPV is negative and rejected if it is positive.
An investment with greater discounted cash inflows than discounted cash outflows will always have a positive NPV.
An investment should be accepted only if the PI is equal to the initial cash flow.