An FI has assets of $800 million and liabilities of $740 million. If the FI had contingent assets of $40 million and contingent liabilities of $160 million, calculate the stockholder's true net worth (ignore the option mentioned in previous question).
A)-$60 million.
B)$60 million.
C)$70 million.
D)-$160 million.
E)$190 million.

Question

Quizplus · Accepted Answer

The true net worth is calculated by subtracting total liabilities (including contingent liabilities) from total assets (including contingent assets). Here, total assets = $800 million + $40 million = $840 million, and total liabilities = $740 million + $160 million = $900 million. Thus, the true net worth = $840 million - $900 million = -$60 million.

An FI Has Assets of $800 Million and Liabilities of $740