3. A securities firm has provided the balance sheet below. Assets ($ millions) Liabilities and Equity ($
Question:
3. A securities firm has provided the balance sheet below.
Assets ($ millions) Liabilities and Equity ($ millions)
Cash $ 75 Short-term funding $ 32
Debt securities 250 Bonds 425
Equity securities 600 Debentures 280
Other assets 55 Equity 243
Total Assets $ 980 Total Liabilities and Equity $ 980
The debt securities have an annual 8.00% coupon rate, 15 years to maturity and a yield to maturity of 8.50%. The market value of the equity securities and the other assets is equal to their book value. The firm has 800,000 shares outstanding and the price per share is $55.75.
a. Calculate the firm’s aggregate indebtedness to net capital ratio. (6 points)
b. Calculate the firm’s highly liquid assets to total liabilities ratio. (6 points)
c. Based on the firm’s ratios from a and b, is it in compliance with Rule 15C 3-1? Why or why not? (4 points)
Expert Answer:
a Calculate the firms aggregate indebtedness to net capital ratio 6 points Aggregate indebtedness sh... View the full answer
Financial Institutions Management A Risk Management Approach
ISBN: 978-0071051590
8th edition
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
