Question: 5. A securities firm has provided the balance sheet below. Assets ($ millions) Liabilities and Equity ($ millions) Cash $ 34 Short-term funding $ 27
5. A securities firm has provided the balance sheet below. Assets ($ millions) Liabilities and Equity ($ millions) Cash $ 34 Short-term funding $ 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 $35.67. a. Calculate the firm's aggregate indebtedness to net capital ratio. (5 points) b. Calculate the firm's highly liquid assets to total liabilities ratio. (5 points) C. Based on the firm's ratios from a and b, is it in compliance with Rule 15C 3-1? Why or why not? (3 points) 5. A securities firm has provided the balance sheet below. Assets ($ millions) Liabilities and Equity ($ millions) Cash $ 34 Short-term funding $ 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. (5 points) b. Calculate the firm's highly liquid assets to total liabilities ratio. (5 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? (3 points)
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