Homework 1
Total: 112
Please show all steps you take to get your answers.
1. Below is the balance sheet of GameStop in 2020. Please identify two real assets and two items which can be traded as financial assets from the table. For each of the financial assets you identified, please indicate: a) the financial institutions that could possibly involved in the issuance of the financial asset; b) which market the financial asset could possibly be traded at; and c) in what way(s) the financial assets you identified are different from each other. (10)
ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
Cu
ent assets:
Cu
ent liabilities:
Cash and cash equivalents
$ XXXXXXXXXX
Accounts payable
$ XXXXXXXXXX
Restricted cash
110.00
Accrued liabilities and other cu
ent liabilities
626.80
Receivables, net
105.30
Cu
ent portion of operating lease liabilities
227.40
Merchandise inventories
602.50
Short-term debt, including cu
ent portion of long-term debt, net
121.70
Prepaid expenses and other cu
ent assets
224.90
Bo
owings under revolving line of credit (See Note 19 “Subsequent Events”)
25.00
Assets held-for-sale
—
Total cu
ent assets
1,551.20
Total cu
ent liabilities
1,342.70
Property and equipment, net
201.20
Operating lease right-of-use assets
662.10
Long-term debt, net
216.00
Defe
ed income taxes
—
Operating lease liabilities
456.70
Other long-term liabilities
20.50
Long-term restricted cash
16.50
Total liabilities
2,035.90
Other noncu
ent assets
41.60
Commitments and contingencies (Note 13)
Total assets
2472.6
Stockholders’ equity:
Class A common stock — $.001 par value; authorized 300.0 shares; 65.3 and 64.3 shares issued and outstanding, respectively
0.10
Additional paid-in capital
11.00
Accumulated other comprehensive loss
(49.30)
Retained earnings
474.90
Total stockholders' equity
436.70
Total liabilities and stockholders’ equity
2472.6
2. Use data from the table below to answer this question:
XXXXXXXXXXDay 0 XXXXXXXXXXDay 1
Price # shares XXXXXXXXXXPrice # shares
Stock
A XXXXXXXXXX XXXXXXXXXX,000 XXXXXXXXXX XXXXXXXXXX,000
B XXXXXXXXXX XXXXXXXXXX,000 XXXXXXXXXX XXXXXXXXXX,000
C XXXXXXXXXX XXXXXXXXXX,000 XXXXXXXXXX XXXXXXXXXX,000
D XXXXXXXXXX XXXXXXXXXX,000 XXXXXXXXXX XXXXXXXXXX,000
Note: the columns, #shares, on day 0 and day 1 indicate the total share outstanding for each stock.
Suppose we want to construct indices using all four stocks above, and we choose the divisor on day 0 to be 1.
a. Calculate the index level for price-weighted, value-weighted, and equal-weighted indices at day 0. (18)
. Calculate the index level for price-weighted, value-weighted, and equal-weighted indices at day 1. (18)
c. Calculate the return of each index by the end of day 1. (9)
d. After the market is close by the end of day 1, company C announces a 2.5-1 stock split, will there be any influence on each index? Explain. (18)
3. You sold short 200 shares of common stock at $60 per share. The initial margin is 60%. What is your initial investment? (9)
4. You purchased 100 shares of IBM common stock on margin at $70 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin. (15)
5. You purchased 100 shares of common stock on margin at $45 per share. Assume the initial margin is 50%, and the stock pays no dividend. What would the maintenance margin be if a margin call is made at a stock price of $30? Ignore interest on margin.(15)