FRM Part II · FRM Exam Part II · Monitoring Liquidity
A treasurer projects cash flows for the next 30 days. Contractual inflows are USD 500 million and contractual outflows are USD 620 million. Under a behavioral view, 10% of contractual inflows from loans are delayed beyond 30 days, and these loans account for USD 400 million of the inflows. In addition, USD 30 million of committed credit lines are expected to be drawn. What is the behavioral net 30-day cash flow?
The behavioral net 30-day cash flow is negative USD 190 million. Inflows fall by USD 40 million to 460 because of delayed loan repayments, and outflows rise by USD 30 million to 650 from credit line drawdowns, giving a net of -190.
- A-190Correct
- B-160
- C-120
- D-150
Explanation
Delayed inflows: 10% x 400 = 40, so inflows become 460. Outflows become 620 + 30 = 650. Net = 460 - 650 = -190. Option -160 omits the drawdown, -150 omits the delay but wrongly nets the drawdown, and -120 is the contractual gap.
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