Question

Barry gets hurt at work and must go on disabililty for 4 months. On disability, the pay that Barry receives is 60% of his normal net pay. Barry should be fine if he has a plan for _____.
a.
financing
b.
managing his investments
c.
managing his liquidity
d.
protecting his assets



Please select the best answer from the choices provided


A
B
C
D

Answer 1

A.

Explanation: It will be financing because he has to make sure the money he will be getting is enough for him and for him to pay bills, etc.

Answer 2

Option-c. Barry should have to plan for managing his liquidity.

Explanation:

Given that Barry had been disabled for the upcoming 4 months and he will receive only 60% of his net normal pay. This implies that Barry will receive lesser amount than before. Say, if Barry's pay is 100 dollars he will only receive 60% of 100 dollars i.e. 60 dollars.

So, in the current situation Barry has to mainly concentrate on his liquidity because liquid assets or cash are required for any unexpected short term risks or crisis in the household. Liquidity is important not only in the company but also for the day-to-day life needs.

Liquidity is the cash or any cash equivalents that can be easily converted into cash for current usage. In household, even planning for the situation that electronics in your house needs repair is also part of a plan for managing the liquidity.

Therefore, we can conclude that Barry will focus on managing his liquidity.