A securities firm has provided the balance sheet below. Assets ($ millions) Liabilities and Equity (S millions) Short-term funding Cash $ 34 $ 27 Debt securities 175 Bonds 300 Equity securities 400 Debentures 197 Equity Total Liabilities and Equity Other assets 12 97 Total Assets $ 621 $ 621 The debt securities have an annual 7.25% coupon rate, 22 years to maturity and a yield to maturity of 6.75%. The market value of the equity securities and the other assets is equal to their book value. The firm has 500,000 shares outstanding and the price per share is $35.67. a. Calculate the firm's aggregate indebtedness to net capital ratio. b. Calculate the firm's highly liquid assets to total liabilities ratio. c. Based on the firm's ratios from a and b, is it in compliance with Rule 15C 3-1? Why or why not?
A securities firm has provided the balance sheet below. Assets ($ millions) Liabilities and Equity (S millions) Short-term funding Cash $ 34 $ 27 Debt securities 175 Bonds 300 Equity securities 400 Debentures 197 Equity Total Liabilities and Equity Other assets 12 97 Total Assets $ 621 $ 621 The debt securities have an annual 7.25% coupon rate, 22 years to maturity and a yield to maturity of 6.75%. The market value of the equity securities and the other assets is equal to their book value. The firm has 500,000 shares outstanding and the price per share is $35.67. a. Calculate the firm's aggregate indebtedness to net capital ratio. b. Calculate the firm's highly liquid assets to total liabilities ratio. c. Based on the firm's ratios from a and b, is it in compliance with Rule 15C 3-1? Why or why not?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:5. A securities firm has provided the balance sheet below.
Assets ($ millions)
$ 34
Liabilities and Equity ($ millions)
Short-term funding
Cash
$ 27
Debt securities
175
Bonds
300
Equity securities
400
Debentures
197
Other assets
12
Equity
97
Total Assets
$ 621
Total Liabilities and Equity
$ 621
The debt securities have an annual 7.25% coupon rate, 22 years to maturity and a yield to maturity
of 6.75%. The market value of the equity securities and the other assets is equal to their book value.
The firm has 500,000 shares outstanding and the price per share is $35.67.
a. Calculate the firm's aggregate indebtedness to net capital ratio.
b. Calculate the firm's highly liquid assets to total liabilities ratio.
Based on the firm's ratios from a and b, is it in compliance with Rule 15C 3-1? Why or why not?
C.
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