why is there a trade-off between liquidity and solvency?

Q: WHAT IS THE VALUE OF DISCOUNTED FLOWS

A: As per Time value of money, there are present values as well as future values.

Q: What are the advantages of balance sheet?

A: Financial Statement:   A financial statement is the complete record of financial transactions that…

Q: Why is quick ratio deemed a better measure of liquidity?

A: Liquidity represents the ability of the corporation to convert the asset into cash.

Q: Why might purchasing power parity fail to hold?

A: It refers to the relationship which indicates the same cost and same kinds of products in the market…

Q: What does liquidity mean?

A: Liquidity:

Q: do liquid assets frequently have lower rates of return than fixed assets?

A: Liquid assets are the cash or cash equivalents which can be drained out frequently whereas fixed…

Q: What is “implied volatility”, how is it calculated, and how can it be used?

A: Implied volatility (IV) is a forecast of how much a security's price will fluctuate over a certain…

Q: Define Liquidity Analysis?

A: Liquidity analysis is very essential as it shows the ability of the firm in paying short-term bills.…

Q: What is arbitrage?

A: Arbitrage It is the buying and offering of an asset to benefit from a distinction within the cost…

Q: Explain Payment Caps and Negative Amortization?

A: Payment Caps: A payment cap is a customer protection that bounds the amount that your monthly…

Q: What are the different liquidity tools?

A: Liquid assets are those assets which are either in cash form or can be converted into cash into…

Q: O liquidity risk

A: Risks: Risks are the difference between the expected gains and the actual gains. Risks are core…

Q: What is an arbitrage opportunity

A: Arbitraging involves simultaneously buying and selling of an asset in spot or future to earn a…

Q: What is liquidity ratio?

A: Liquidity ratio is very essential as it shows the ability of the firm in paying short-term bills.…

Q: define volatility

A: Volatility is a rate at which the cost of a security increments or diminishes for a specified set of…

Q: what is IPO underpricing? How do asymmetric information model explain this phenomena?Briefly explain

A: When an IPO( initial public offering )  is set at a price lower than its real market value. So, when…

Q: What is the importance of liquidity?

A: Introduction: Liquidity is nothing but the ability of the bank to turn money into cash and to be…

Q: What is the difference between solvency ratio and liquidity ratio?

A: The quantitative technique that helps in the measurement of the liquidity, profitability, solvency…

Q: What is liquidity (security)?

A: Introduction: Liquidity is associated to rapid access to cash. Persons hold assets or security, and…

Q: What is market risk?

A: Investments in assets are subject to risks and uncertainty of returns  Risks can be systematic or…

Q: How can we determine the firm's liquidity?

A: Liquidity: It can be defined as the ease or comfort with which a firm can convert its securities and…

Q: Why is liquidity ratio important?

A: Liquidity is how easily cash is available on hand. Liquidity ratio is defined as a ratio that is…

Q: QI: Explain in details the Liquidity gaps time profiles and how the gap profiles changes.

A: In finance, liquidity refers to the ability of a business or an individual of converting its assets…

Q: What does “nonrecourse” financing mean?

A: Nonrecourse financing is a branch of commercial lending. It makes the lender only to repay from the…

Q: What is the difference between pure arbitrage and risk arbitrage?

A: Pure arbitrage refers to make a riskless profit without taking any risk while risk arbitrage refers…

Q: What is the role of transferring credit risk? What is the various instruments used to transfer this…

A: Risk transfer is a management strategy that involves transferring the risk from one party to another…

Q: What is off–balance sheet financing?

A: To keep the debt-to-equity and leverage ratios low, companies opt to record certain liabilities and…

Q: do you understand by the term "Liquidity Management". Why is important ?

A: in organisation company have large amount money held in different forms assets but it takes time to…

Q: Which of the following usually is least importan liquidity? Choose Quick ratio

A: Step 1   Hello. Since your question has multiple parts, we will solve the first question for you. If…

Q: What is purchasing power parity? Why might purchasing power parity fail to hold?

A: To measure the prices of goods in different countries purchasing parity is used. As per the…

Q: What does mangment want to achieve when it tries to "ensure liquidity" and  "maintain solvency "?

A: Companies do maintain sufficient liquidity to maintain the day-to-day operations of the entity. It…

Q: What caused the increase in liquidity ratios??

A: Liquidity ratios use metrics such as the quick ratio, current ratio, and operating cash flow ratio…

Q: What is liquidity?

A: Cash is said to be the most liquid asset of the business. Assets are said to be highly liquid if…

Q: Is statistical arbitrage true arbitrage? Explain.

A: Statistical arbitrage refers to the strategy in which investor tries to make profit due to the…

Q: What is liquidity (corporation)?

A: Ability of a firm to raise the cash whenever there is need is known as liquidity of the company.…

Q: Money market instruments are distinguished by what characteristics, if any, do they have?

A: The money market is a word that relates to the trading of relatively short-term debt securities.

Q: What is liquidity black holes?

A: Liquidity is when assets can be easily traded in the market with no compromise in the price of the…

Q: What are the weaknesses of the payback method?

A: Payback period is the amount of time required for firm to recover its initial investment in projects…