Question

You have excess cash. You anticipate that you will need to have 6 months’ worth of expense covered, in case of emergencies. You want to make sure that you can have access to your cash, but also gain interest as well, throughout the 6 months. Your expenses are $2300 per month. You have $20,000 in cash. You want to put it in various accounts or funds for: 1 month, 3 months, 6 months. The remaining amounts you want to have put into something that will earn you the highest interest rates. How would you allocate or tier them in various accounts (checking, NOW, savings, MMDA, CDs, T-Bills, Mutual funds, brokerage accounts, asset management accounts), in order to manage your liquidity (have access to your money and still gain interest)?

Answer #1

Suppose all the expenses are payable at the end of the every month.

Hance you need $ 2300 at the end of every month. There are the type of account you have i.e. 1 month 3 month and 6 month .

So should invest $4600 in 1month account that should be t.bills, remaining $ 15400 out of which $6900 for third, fourth and fifth month experience invest in 3month account that should be MMDA and CDs etc.

And remaining amount $ 8500 invest in 6 month account that should be mutual funds etc.

You have just forecasted the AUD’ total deposits and total loans
for the next six months. Your resulting estimates (in millions) are
shown below.
Month
Estimated Loans
Estimated Deposits
1
30
40
2
40
40
3
60
65
4
50
80
5
20
40
6
70
50
a. Use the sources and uses of funds approach to indicate which
months are likely to result in liquidity deficits if these
forecasts turn out to be true.
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You have some extra cash this month and you are considering
putting it toward your car loan. Your interest rate is
7.2%,
your loan payments are
$671
per month, and you have
36
months left on your loan. If you pay an additional
$1,300
with your next regular
$671
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Scenario:
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in the United States expressed interest in.
The first transaction is for the import of good
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