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UkoKoshka [18]
3 years ago
12

Comanic Corp. has common stock of $5,400,000, retained earnings of $2,000,000, unrealized gains on trading securities of $100,00

and unrealized losses on available for sale securities of $200,000. What is the total amount of its stockholders equity?
Business
1 answer:
aalyn [17]3 years ago
6 0

Answer:

$7,200,000

Explanation:

Given that,

Common stock = $5,400,000

Retained earnings = $2,000,000

Unrealized gains on trading securities = $100,000

Unrealized losses on available for sale securities = $200,000

Stockholder's equity:

= Common stock + Retained earnings - Unrealized losses on available for sale securities

= $5,400,000 + $2,000,000 - $200,000

= $7,200,000

Note that:

Unrealized gains on trading securities should be presented on the income statement. Hence, the ending retained earnings balance was already been adjusted with Unrealized gains (losses) on trading securities.

Unrealized losses on available for sale securities not included in the income  statement and it directly goes to the balance sheet.

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7 0
3 years ago
It is July 16. A company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like
Anuta_ua [19.1K]

Answer:

A. The company should take Short position and

140 contract

B. The company should take Long position and 60 contract

B.

Explanation:

Calculation for what position that the company should take

Using this formula

Company position=(Beta of the portfolio*Change in beta of the portfolio) *Portfolio of stocks /Index futures price* Each Contract index times

Let plug in the formula

Company position =(1.2-0.5)*$100 million/2,000*250

Company position=0.7*$100 million/500,000

Company position=$70,000,000/500,000

Company position=140 contract

Therefore the position that the company should take will be SHORT position with 140 contract

B. Calculation for the increase in beta of the portfolio from 1.2 to 1.5 and what position tthr company should take in the futures contract and how many contracts

Using this formula

Company position=Increase in beta of the portfolio *Portfolio of stocks /Index futures price* Each Contract index times

Let plug in the formula

Company position =(1.5-1.2)*$100 million/2,000*250

Company position=0.3*$100 million/500,000

Company position=$30,000,000/500,000

Company position=60 contract

Therefore the company should take Long position and 60 contract

4 0
3 years ago
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