Professional Documents
Culture Documents
Exhibit 1
Exhibit 1
Consolidated Annual Income Statements for the Fiscal Year Ending in September
1997
Net Revenues
Transaction Income
Net Interest
Other
Total Net Revenues
1996
1995
$51,936,902
18,193,946
7,107,492
77,238,340
$36,469,561
11,477,878
6,391,314
54,338,753
$23,977,481
8,434,584
2,607,538
35,019,603
19,290,808
3,320,262
5,623,468
5,422,839
13,970,834
59,000
363,002
7,763,014
55,813,227
14,049,642
2,530,642
3,685,535
2,889,654
7,537,265
148,014
363,002
4,717,406
35,921,160
8,481,977
2,516,796
2,352,590
1,626,725
4,842,392
1,428,663
94,152
2,846,280
24,189,575
21,425,113
18,417,593
10,830,028
7,602,964
7,259,248
3,798,881
$13,822,149
$11,158,345
$7,031,147
Taxes
Net Income
EPS
$1.00
Shares Outstanding
Source:
13,768,889
$0.87
12,813,823
$0.55
12,813,823
Exhibit 2
Exhibit 2
Consolidated Annual Balance Sheets for the Fiscal Year Ending in September
1997
ASSETS
Cash and Cash Equivalents
Cash and Investments Segregated in Compliance with Federal Regulations
Receivable from Brokers, Dealers, and Clearing Organizations
Receivable from Customers and Correspondents
Furniture, Equipment, and Leasehold Improvements
Goodwill
Equity Investments
Other Investments
Deferred Income Taxes
Other Assets
Total Assets
$53,522,447
319,763,921
17,823,640
325,407,147
8,709,923
6,346,763
7,597,972
5,000,000
39,314
13,145,616
$757,356,743
1996
$15,767,170
175,668,497
15,096,862
166,075,055
3,746,178
6,709,765
7,157,783
5,000,000
444,378
6,013,544
$401,679,232
1,404,999
666,279,440
19,252,931
-3,430,279
1,193,479
356,942,970
7,221,008
4,853,000
806,711
Total Liabilities
690,367,649
371,017,168
Stockholders' Equity:
Class A Common Stock
Class B Common Stock
Additional Paid in Capital
Retained Earnings
131,534
13,644
23,297,506
43,546,410
114,494
13,644
809,665
29,724,261
66,989,094
30,662,064
Source:
$757,356,743
$401,679,232
Exhibit 3
Exhibit 3
5.24%
5.59%
6.22%
6.34%
6.69%
6.61%
Historic Average Total Annual Returns on U.S. Government Securities and Common
Stocks (1950-1996)
T-Bills
Intermediate Bondsa
Long-term Bondsb
Large Company Stocksc
Small Company Stocksd
Standard Deviation
5.2%
6.4%
6.0%
14.0%
17.8%
3.0%
6.6%
10.8%
16.8%
25.6%
Historic Average Total Annual Returns on U.S. Government Securities and Common
Stocks (1929-1996)
T-Bills
Intermediate Bondsa
Long-term Bondsb
Large Company Stocksc
Small Company Stocksd
Standard Deviation
3.8%
5.4%
5.5%
12.7%
17.7%
3.3%
5.8%
9.2%
20.3%
34.1%
Sources: Yields are from Datastream, historical data are from Ibbotson Associates, SBBI 2000
Yearbook .
a
Exhibit 4
Exhibit 4
Source:
Debt/Capital
(Market Values)
Average
1992-1996
Current
0.00
0.60
0.05
0.00
0.79
0.00
0.57
0.57
0.00
0.51
0.00
0.05
NA
0.00
0.00
0.50
0.08
NA
NA
0.00b
0.52
0.53
NA
0.53
0.00
0.04
0.38
NA
Investment Services includes brokerage, asset management, investment banking, and trading.
Indicates average over 1993-1996.
c
Indicates average over 1992-1995.
b
(Book Values)
Average
1992-1996
Current
0.00
0.69
0.25
0.00
0.80
0.00
0.77
0.70
0.00
0.63
0.00
0.07
NA
0.00
0.00
0.60
0.30
NA
0.79b
0.00b
0.65
0.63
NA
0.58
0.00
0.06
0.70c
NA
Brokerage
Revenues (%)
57
35
82
95
13
0
37
12
0
46
81
51
99
0
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.425087415
R Square
0.18069931
Adjusted R Square
0.166573436
Standard Error
0.106900147
Observations
60
ANOVA
df
Regression
Residual
Total
1
58
59
SS
0.146183303
0.662803197
0.8089865
MS
F
Significance F
0.146183303 12.79208 0.00071031
0.011427641
Upper 95%
0.023891575
3.134894443
Lower 95.0%
-0.0374284
0.8850508
Upper 95.0%
0.023891575
3.134894443
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.482222
R Square 0.232538
Adjusted R Square
0.219306
Standard Error
0.104768
Observations
60
ANOVA
df
Regression
Residual
Total
SS
MS
F
Significance F
1 0.192896 0.192896 17.57379 9.56E-05
58 0.636628 0.010976
59 0.829524
Coefficients
Standard Error t Stat
Intercept
-0.01608 0.015011 -1.07126
X Variable 1 2.308888 0.55077 4.19211
Exhibit 5
Exhibit 5
Date
Shares
31-Mar-97
30-Apr-97
30-May-97
30-Jun-97
31-Jul-97
29-Aug-97
13,153
13,153
13,153
14,518
14,518
14,518
Date
Shares
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
30-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
29-Sep-89
31-Oct-89
30-Nov-89
29-Dec-89
31-Jan-90
28-Feb-90
30-Mar-90
30-Apr-90
31-May-90
29-Jun-90
31-Jul-90
29,121
29,121
29,121
25,388
25,388
25,388
25,388
25,388
25,388
25,294
25,294
25,294
25,328
25,328
25,328
25,354
25,354
25,354
25,354
25,354
25,354
25,352
25,352
25,352
25,386
25,386
25,386
25,332
25,332
25,332
25,332
25,332
25,332
25,099
25,099
Ameritrade
Price
15.625
12.500
14.000
15.750
15.375
18.813
Charles Schwab
Price
15.875
7.875
6.625
6.000
6.500
9.000
7.375
7.625
6.875
7.250
7.500
6.750
6.750
7.500
6.750
6.750
10.250
8.625
8.875
10.125
11.750
11.000
16.500
15.750
14.000
13.000
12.500
13.875
13.500
15.250
17.000
15.125
15.750
15.250
13.625
Dividend
Stock Split
1.000
-
for y
Exhibit 5
31-Aug-90
28-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90
31-Jan-91
28-Feb-91
28-Mar-91
30-Apr-91
31-May-91
28-Jun-91
31-Jul-91
30-Aug-91
30-Sep-91
31-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
25,099
25,255
25,255
25,255
24,464
24,464
24,464
24,464
24,464
24,464
24,435
24,435
24,435
25,596
25,596
25,596
38,394
38,394
38,394
38,479
38,479
38,479
38,626
38,626
38,626
38,149
38,149
38,149
37,741
37,741
37,741
37,741
37,741
37,741
56,612
56,612
56,612
57,625
57,625
57,815
57,815
57,815
57,815
57,815
57,815
57,815
57,114
57,114
57,114
56,829
56,829
57,325
12.625
11.375
12.625
11.875
11.375
16.000
18.250
20.250
18.125
22.500
24.750
27.500
28.375
31.125
37.750
32.750
30.375
31.875
33.250
34.625
28.500
28.875
23.500
24.625
22.500
18.000
20.250
24.875
26.125
30.250
32.375
36.500
32.750
35.250
28.500
29.000
32.875
34.500
34.625
31.875
32.375
29.500
27.500
26.875
28.375
30.250
24.750
26.750
30.750
29.625
35.375
31.875
0.040
0.040
0.040
0.050
0.060
0.040
0.060
0.060
0.060
0.060
0.075
0.050
0.050
0.070
0.070
0.070
0.070
-
10
3
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
3
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Exhibit 5
30-Dec-94
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
31-Jan-96
29-Feb-96
29-Mar-96
30-Apr-96
31-May-96
28-Jun-96
31-Jul-96
30-Aug-96
30-Sep-96
31-Oct-96
29-Nov-96
31-Dec-96
31-Jan-97
28-Feb-97
31-Mar-97
30-Apr-97
30-May-97
30-Jun-97
31-Jul-97
29-Aug-97
57,325
57,325
57,325
85,988
85,988
85,988
85,896
85,896
87,061
174,122
174,122
174,678
174,678
174,678
174,678
174,678
174,032
174,032
174,989
174,989
174,989
175,166
175,166
175,166
175,173
175,173
175,173
175,173
175,068
175,068
175,813
176,422
176,422
34.875
40.000
44.375
32.250
34.250
35.000
43.875
46.125
46.625
29.000
22.875
24.250
20.125
25.125
25.500
25.875
24.500
24.250
24.500
24.125
25.000
23.000
25.000
30.250
32.000
37.500
37.500
32.000
36.625
40.625
40.500
47.000
42.750
Date
Shares
E*Trade
Price
30-Aug-96
30-Sep-96
31-Oct-96
29-Nov-96
31-Dec-96
31-Jan-97
28-Feb-97
31-Mar-97
30-Apr-97
30-May-97
30-Jun-97
31-Jul-97
29-Aug-97
29,393
29,539
29,539
29,539
29,545
29,545
29,545
30,440
30,440
30,440
30,958
30,958
30,958
10.500
13.188
11.125
10.938
11.500
17.625
24.000
18.000
15.000
17.625
19.625
30.500
32.125
0.090
0.060
0.080
0.040
0.040
0.040
0.050
0.050
0.050
0.050
0.050
1
1
1
3
1
1
1
1
1
3
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
11
1
1
1
2
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
for y
Exhibit 5
Date
Shares
31-Jan-84
29-Feb-84
30-Mar-84
30-Apr-84
31-May-84
29-Jun-84
31-Jul-84
31-Aug-84
28-Sep-84
31-Oct-84
30-Nov-84
31-Dec-84
31-Jan-85
28-Feb-85
29-Mar-85
30-Apr-85
31-May-85
28-Jun-85
31-Jul-85
30-Aug-85
30-Sep-85
31-Oct-85
29-Nov-85
31-Dec-85
31-Jan-86
28-Feb-86
31-Mar-86
30-Apr-86
30-May-86
30-Jun-86
31-Jul-86
29-Aug-86
30-Sep-86
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
6,318
11,149
11,149
11,149
11,149
11,149
11,149
11,149
11,149
11,149
11,149
11,149
16,724
16,724
9,477
9,477
9,477
9,477
9,477
9,477
9,477
12
for y
Exhibit 5
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
30-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
29-Sep-89
31-Oct-89
30-Nov-89
29-Dec-89
31-Jan-90
28-Feb-90
30-Mar-90
30-Apr-90
31-May-90
29-Jun-90
31-Jul-90
31-Aug-90
28-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90
31-Jan-91
28-Feb-91
28-Mar-91
30-Apr-91
31-May-91
28-Jun-91
31-Jul-91
30-Aug-91
30-Sep-91
31-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
9,477
9,477
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,452
9,437
9,437
9,437
9,210
9,210
9,210
9,452
9,452
9,452
9,210
9,210
9,210
9,220
9,220
9,220
9,292
9,292
12.625
13.500
12.250
12.625
11.500
11.875
11.500
11.250
11.750
11.750
11.500
10.875
15.000
13.750
13.250
13.000
16.125
14.000
16.500
17.000
16.750
15.750
14.875
13.625
12.000
13.625
13.250
13.000
15.250
14.000
13.500
11.375
10.375
9.750
10.125
10.250
13.125
16.125
18.875
17.500
17.750
17.000
19.625
20.625
19.250
20.375
20.000
27.750
27.500
28.500
28.625
21.500
0.180
0.060
0.060
0.060
0.060
0.060
0.060
0.060
0.130
0.070
0.070
0.070
0.070
0.070
0.070
0.070
0.180
-
13
1
1
1
1
1
1
1
1
Exhibit 5
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
30-Dec-94
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
31-Jan-96
29-Feb-96
29-Mar-96
30-Apr-96
31-May-96
28-Jun-96
31-Jul-96
30-Aug-96
9,292
9,292
9,292
9,292
9,884
9,884
9,884
9,884
9,884
9,884
9,824
9,824
9,824
10,315
10,623
10,623
10,643
10,643
10,678
11,212
10,678
11,238
11,238
11,238
11,238
11,168
11,168
11,121
11,121
11,111
11,111
11,111
11,075
11,075
11,075
11,075
11,075
16,613
16,613
16,613
16,613
24,920
24,952
24,952
25,056
25,056
25,056
25,056
25,056
25,056
25,178
25,178
21.500
21.000
20.125
19.625
20.125
21.000
25.375
24.750
27.000
26.000
27.125
25.125
26.125
28.875
30.750
35.000
36.250
35.875
34.250
35.750
35.375
28.375
25.625
26.375
26.875
25.375
24.750
29.250
25.875
25.750
24.750
28.375
30.875
35.000
35.500
40.625
47.000
36.625
38.500
37.375
45.875
23.750
25.375
20.500
23.250
26.250
29.500
30.500
33.875
32.500
28.375
29.250
0.080
0.080
0.080
0.220
0.100
1.443
0.100
0.100
1.788
0.270
0.120
0.120
0.120
0.290
0.150
0.100
0.070
0.080
0.070
0.080
14
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
3
1
1
1
3
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
2
1
1
1
1
1
1
1
1
1
1
Exhibit 5
30-Sep-96
31-Oct-96
29-Nov-96
31-Dec-96
31-Jan-97
28-Feb-97
31-Mar-97
30-Apr-97
30-May-97
30-Jun-97
31-Jul-97
29-Aug-97
25,178
25,178
25,178
25,178
25,173
25,173
37,760
37,760
37,760
38,606
38,664
38,664
Date
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
30-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
29-Sep-89
31-Oct-89
30-Nov-89
29-Dec-89
31-Jan-90
28-Feb-90
30-Mar-90
2,572
2,572
2,572
2,572
2,572
2,572
2,572
2,572
2,572
2,482
2,482
2,482
2,482
2,482
2,482
2,482
2,482
2,482
2,482
2,482
2,482
2,472
2,472
2,472
2,420
2,420
2,420
2,419
2,419
2,419
2,417
2,417
2,417
2,420
2,420
26.500
26.250
28.375
29.875
36.625
35.000
20.875
22.125
23.000
23.250
26.250
34.250
6.938
8.000
8.250
7.500
8.000
6.250
6.000
5.250
4.500
4.750
6.000
5.875
6.250
5.000
3.500
3.250
4.000
3.375
3.500
2.750
3.750
3.750
4.750
4.250
5.000
6.000
6.000
5.750
5.625
5.375
5.000
4.500
4.375
3.750
4.250
0.080
0.190
0.060
0.060
0.120
-
15
1
1
1
1
1
1
1
1
Stock Split
Exhibit 5
30-Apr-90
31-May-90
29-Jun-90
31-Jul-90
31-Aug-90
28-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90
31-Jan-91
28-Feb-91
28-Mar-91
30-Apr-91
31-May-91
28-Jun-91
31-Jul-91
30-Aug-91
30-Sep-91
31-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
2,420
2,572
2,572
2,572
2,377
2,377
2,377
2,370
2,370
2,370
2,320
2,320
2,320
2,320
2,900
2,900
2,943
2,943
2,943
2,943
2,943
2,943
4,415
4,466
4,466
4,466
4,466
4,466
4,466
4,847
4,847
4,847
4,847
4,847
4,847
6,071
6,071
6,071
6,072
6,072
6,072
6,072
6,072
9,108
9,150
9,150
9,150
9,150
9,150
9,150
9,150
9,150
4.375
4.250
4.750
4.625
4.375
4.250
4.000
3.750
3.625
3.750
4.500
6.125
7.000
8.250
8.000
10.375
10.750
14.250
14.000
15.500
27.500
26.500
21.750
25.375
20.625
21.750
17.125
17.625
13.750
14.375
15.625
20.750
20.500
25.250
24.375
20.500
18.500
27.250
33.500
33.000
42.625
50.125
47.250
25.750
21.250
21.250
20.500
17.625
16.000
15.250
13.375
13.000
0.150
0.160
0.200
0.250
-
16
5 for 4
3 for 2
5 for 4
3 for 2
Exhibit 5
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
30-Dec-94
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
31-Jan-96
29-Feb-96
29-Mar-96
30-Apr-96
31-May-96
28-Jun-96
31-Jul-96
30-Aug-96
30-Sep-96
Source:
9,150
9,150
9,150
9,150
9,154
9,154
9,154
9,154
9,154
9,154
9,154
9,154
9,154
11,442
11,442
11,442
11,452
11,452
11,452
11,452
11,452
11,458
11,458
11,501
11,501
11,501
17.000
14.125
16.125
14.250
12.250
14.500
17.375
16.125
15.625
17.500
23.000
27.625
28.625
25.500
19.750
19.750
24.750
23.625
24.625
33.375
36.250
36.625
37.125
37.625
37.375
37.875
0.200
0.250
0.220
-
5 for 4
17
Exhibit 5
Market returns
18
Exhibit 5
0.048
0.041
0.040
-0.213
0.013
-0.229
0.048
-0.094
-0.250
0.114
0.186
0.048
0.138
0.066
0.113
-0.112
0.071
0.263
0.019
0.118
0.047
0.005
-0.086
0.015
-0.095
-0.073
-0.023
0.055
0.062
-0.222
0.077
0.130
-0.038
0.165
-0.110
-0.001650
0.013290
-0.023680
0.013850
0.006520
-0.019240
0.039930
-0.020760
0.012420
0.010900
0.040190
0.017540
0.012330
0.005450
0.025010
-0.025510
0.029420
0.005130
-0.000760
0.039340
0.000610
0.018040
-0.017350
0.019450
0.031330
-0.024090
-0.045740
0.009830
0.009500
-0.027380
0.030410
0.042830
-0.018650
0.014870
-0.037070
19
Exhibit 5
0.086
0.130
0.099
0.124
0.060
0.021
0.202
0.051
0.011
-0.108
-0.266
0.057
-0.205
0.201
0.015
0.014
-0.054
-0.010
0.010
-0.013
0.035
-0.087
0.082
0.174
0.055
0.012750
0.020550
0.039620
0.026970
0.024880
0.034160
0.030840
0.040670
0.009340
0.036390
-0.011150
0.042970
0.015400
0.028090
0.016050
0.011200
0.025130
0.026720
-0.007660
-0.053390
0.032220
0.052990
0.013940
0.065730
-0.011350
20
Exhibit 5
mkt returns
21
Exhibit 5
-0.009
0.041
0.004
-0.331
-0.001650
0.013290
-0.023680
0.013850
22
Exhibit 5
0.004
-0.024
-0.043
-0.021
0.025
0.042
0.176
-0.025
0.083
-0.030
0.041
-0.080
0.042
0.145
0.061
0.124
0.034
-0.010
-0.045
0.092
-0.011
-0.237
-0.107
0.028
0.023
-0.059
-0.025
0.158
-0.130
-0.005
-0.036
0.128
0.081
0.126
0.014
0.126
0.136
0.223
0.049
-0.027
0.185
-0.432
0.067
-0.238
0.118
0.117
0.110
0.033
0.102
-0.042
-0.145
0.033
0.006520
-0.019240
0.039930
-0.020760
0.012420
0.010900
0.040190
0.017540
0.012330
0.005450
0.025010
-0.025510
0.029420
0.005130
-0.000760
0.039340
0.000610
0.018040
-0.017350
0.019450
0.031330
-0.024090
-0.045740
0.009830
0.009500
-0.027380
0.030410
0.042830
-0.018650
0.014870
-0.037070
0.012750
0.020550
0.039620
0.026970
0.024880
0.034160
0.030840
0.040670
0.009340
0.036390
-0.011150
0.042970
0.015400
0.028090
0.016050
0.011200
0.025130
0.026720
-0.007660
-0.053390
0.032220
23
Exhibit 5
-0.104
-0.010
0.078
0.050
0.052990
0.013940
0.065730
-0.011350
24
Exhibit 5
25
Exhibit 5
26
Exhibit 6
Exhibit 6
Date
31-Jan-84
29-Feb-84
30-Mar-84
30-Apr-84
31-May-84
29-Jun-84
31-Jul-84
31-Aug-84
28-Sep-84
31-Oct-84
30-Nov-84
31-Dec-84
31-Jan-85
28-Feb-85
29-Mar-85
30-Apr-85
31-May-85
28-Jun-85
31-Jul-85
30-Aug-85
30-Sep-85
31-Oct-85
29-Nov-85
31-Dec-85
31-Jan-86
28-Feb-86
31-Mar-86
30-Apr-86
30-May-86
30-Jun-86
Stock Return Data for Investment Service firms, Internet Firms, and the Aggregate Stock Market
A G Edwards
Bear
Stearns
0.026040
-0.111680
-0.042290
0.012050
-0.017860
0.100610
0.016670
0.178140
-0.032710
0.024150
-0.066040
-0.017170
0.331610
-0.007780
-0.036860
-0.094260
0.085970
0.102500
-0.064640
-0.036590
-0.132490
0.088240
0.099100 -0.103450
0.141800 0.193590
0.039710 0.156760
0.149310 0.130840
0.083990 0.128720
-0.086830 0.065640
0.026070 0.003620
-0.066370 -0.168520
Lehman
Bros.
Meckler-media
Merrill
Lynch
Morgan Stanley
Dean Witter
Netscape
-0.013280
-0.167330
-0.019140
-0.011710
-0.044780
0.119790
-0.076280
0.304570
-0.077820
0.023630
-0.091290
-0.013700
0.277780
-0.023190
-0.085820
-0.034290
0.089360
0.011720
0.040930
-0.052240
-0.141730
0.100920
0.127500
0.022300
0.152730
0.036590
0.012230
-0.102720
-0.008080
-0.054610
0.051150
0.013420
-0.062910
27
Paine
Webber
Raymond
James
-0.042860
-0.175370
0.073300
0.080510
-0.113730
0.084960
-0.090160
0.189190
-0.105300
0.029790
-0.041320
-0.046550
0.431820
-0.022220
0.026620
-0.123810
0.065220
-0.040140
-0.092530
-0.038430
-0.049180
0.008620
0.197440
0.003580
0.107140
0.068390
0.036360
-0.137430
0.051530
-0.116500
0.040000
-0.102560
-0.050000
-0.067670
-0.072580
-0.043480
0.018180
0.214290
-0.029410
0.015150
-0.179100
-0.054550
0.430770
0.027030
0.013160
-0.025970
0.013330
0.039470
0.017720
0.025000
-0.048780
0.000000
0.256410
0.015920
0.288890
0.103450
0.171880
-0.100000
-0.007410
-0.040600
Yahoo!
VW NYSE,
AMEX, and
NASDAQ
-0.012910
-0.039170
0.013450
0.002730
-0.052350
0.023590
-0.020350
0.112570
0.000390
0.000130
-0.010620
0.023790
0.085730
0.017000
-0.001930
-0.002180
0.055870
0.017190
-0.000540
-0.004800
-0.039650
0.044570
0.069270
0.043060
0.009860
0.072840
0.053880
-0.008060
0.050810
0.014300
Exhibit 6
Date
31-Jul-86
29-Aug-86
30-Sep-86
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
30-Dec-88
31-Jan-89
28-Feb-89
A G Edwards
-0.067630
0.104660
-0.094340
0.151040
-0.022620
-0.040740
0.334950
0.000000
0.044950
-0.122380
-0.023900
-0.104650
0.073390
0.027180
-0.071130
-0.337840
-0.174420
0.033330
0.080650
0.062390
-0.035460
0.029410
-0.042860
0.159400
-0.006490
-0.039220
0.084080
-0.006330
-0.057320
0.042970
0.169930
-0.044690
Bear
Stearns
-0.141920
0.160310
-0.145530
0.217050
-0.057320
-0.102160
0.318180
-0.022990
-0.024650
-0.121020
-0.028990
0.022090
-0.007350
0.103700
0.080270
-0.400000
-0.145830
0.023900
0.144580
0.157890
-0.054550
0.019420
-0.085710
0.093750
-0.067310
-0.041240
0.028670
0.084210
0.029130
-0.038100
0.178220
0.001010
Lehman
Bros.
Meckler-media
Merrill
Lynch
Morgan Stanley
Dean Witter
Netscape
-0.039710
0.145110
-0.052810
0.195120
-0.074050
-0.075950
0.198630
-0.015430
-0.002920
-0.152050
-0.041380
0.010870
0.100360
0.032570
-0.031750
-0.357380
-0.153060
0.091460
0.072630
0.062500
-0.064360
0.000000
0.031750
0.113990
0.013950
-0.050460
0.039020
0.051640
-0.049550
-0.090050
0.270830
-0.037190
-0.070670
0.149050
-0.119400
0.160830
-0.030890
-0.129190
0.112910
-0.048610
0.036500
0.005280
0.020320
-0.003440
0.023490
0.069370
0.023730
-0.337560
-0.163930
0.148460
-0.019510
0.168660
0.055560
0.106880
-0.086240
0.275100
0.004720
-0.015720
-0.003190
0.051280
-0.036700
0.053970
0.078310
0.032400
28
Paine
Webber
Raymond
James
-0.010990
0.175930
-0.015590
0.172690
-0.075210
-0.063200
0.178570
-0.033540
-0.003500
-0.084210
-0.061150
0.020490
0.052210
0.023050
-0.029960
-0.474900
-0.021760
-0.128790
0.113040
0.109690
-0.078010
-0.038460
0.032320
0.070310
-0.036500
0.038180
0.036760
-0.028370
-0.065400
0.015750
0.116280
0.028060
-0.187500
0.038460
-0.092590
0.081630
-0.056600
-0.026800
0.319590
0.289060
0.261940
-0.116400
-0.101800
-0.031200
-0.062070
0.169120
-0.142640
-0.352940
-0.113640
-0.038460
0.137600
-0.035290
0.089270
-0.067420
-0.048190
-0.008610
0.025640
-0.050000
0.017370
0.157630
-0.069770
0.105000
0.193180
0.051430
Yahoo!
VW NYSE,
AMEX, and
NASDAQ
-0.059690
0.066390
-0.079140
0.049440
0.015170
-0.026540
0.128370
0.047630
0.023240
-0.017130
0.005220
0.043830
0.044050
0.037230
-0.020740
-0.224870
-0.072900
0.070410
0.045340
0.051610
-0.017060
0.011000
0.000940
0.051390
-0.007180
-0.027940
0.037280
0.017650
-0.016400
0.020800
0.065940
-0.016360
Exhibit 6
Date
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
29-Sep-89
31-Oct-89
30-Nov-89
29-Dec-89
31-Jan-90
28-Feb-90
30-Mar-90
30-Apr-90
31-May-90
29-Jun-90
31-Jul-90
31-Aug-90
28-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90
31-Jan-91
28-Feb-91
28-Mar-91
30-Apr-91
31-May-91
28-Jun-91
31-Jul-91
30-Aug-91
30-Sep-91
31-Oct-91
A G Edwards
-0.038830
-0.006130
0.154320
-0.003420
0.178380
0.087160
0.008270
-0.148150
0.103260
-0.096750
-0.115380
0.055900
0.137410
-0.104170
0.203490
-0.007920
-0.058820
-0.081460
-0.268570
0.046880
0.119400
0.095730
0.202450
0.168370
0.136940
0.019310
0.075760
-0.099720
0.198820
0.025220
0.202900
0.076310
Bear
Stearns
0.025420
-0.041320
0.068710
0.034190
0.107440
0.034850
-0.083970
-0.075000
-0.034950
0.009430
-0.028040
0.060770
-0.038460
-0.020000
0.179290
-0.009170
-0.083330
-0.097780
-0.142860
-0.097220
0.124920
0.125000
0.135800
0.142610
0.125000
0.034190
0.094630
-0.128000
0.110090
-0.014880
0.016950
0.058330
Lehman
Bros.
Meckler-media
Merrill
Lynch
Morgan Stanley
Dean Witter
Netscape
-0.047210
0.040540
0.060610
-0.061730
0.232460
-0.039430
-0.108210
-0.025100
-0.086580
-0.004740
-0.133330
0.000000
-0.033330
-0.034480
0.138550
-0.047620
0.061110
-0.132280
-0.091460
-0.046980
0.107140
0.070970
0.186750
0.172590
0.218340
0.089610
0.086090
-0.064020
0.081430
0.018180
0.148810
0.072540
0.006110
-0.055060
0.137630
-0.017010
0.110000
0.062610
-0.063830
-0.069580
0.050940
-0.071810
-0.077370
0.029540
0.008200
0.028460
0.129220
0.024650
-0.163230
-0.068180
-0.121950
-0.012630
0.092780
0.025940
0.101150
0.184870
0.177300
-0.015060
0.087560
-0.103110
0.161200
0.029970
0.063490
0.081290
29
Paine
Webber
Raymond
James
-0.047620
0.014290
0.070700
-0.026490
0.258500
0.016430
-0.160430
-0.121020
-0.014200
0.000000
-0.037040
0.038770
0.044780
-0.042860
0.119700
0.013420
-0.066230
-0.113190
-0.096770
-0.151790
0.126740
0.037740
0.054550
0.319310
0.197370
0.054950
-0.041460
-0.142080
0.095540
0.081630
0.118920
0.202900
-0.009090
0.018350
0.090090
0.069420
0.147290
-0.013510
0.009590
-0.122450
0.015500
-0.061070
-0.012360
0.148760
0.075400
-0.013420
0.118910
-0.036590
0.000000
-0.101270
-0.116340
-0.048000
0.084030
0.144500
0.074830
0.219240
0.270830
0.057380
0.063950
-0.041090
0.034290
0.038670
0.114260
0.105260
Yahoo!
VW NYSE,
AMEX, and
NASDAQ
0.021550
0.048530
0.039650
-0.004980
0.077720
0.022280
-0.001750
-0.029380
0.017850
0.018280
-0.070050
0.014980
0.024150
-0.028160
0.088870
-0.004300
-0.009380
-0.091730
-0.053870
-0.012420
0.065980
0.029540
0.049040
0.075690
0.028780
0.003350
0.040590
-0.044240
0.046830
0.026910
-0.011060
0.017720
Exhibit 6
Date
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
A G Edwards
-0.126870
0.299660
-0.056110
-0.066430
-0.088760
-0.163220
0.098770
-0.078430
-0.006130
0.043460
-0.071430
0.115380
0.166670
-0.063840
0.089950
-0.019420
0.080200
-0.050690
-0.052430
0.051550
0.063730
0.010140
0.082570
0.046610
-0.032390
-0.032970
0.016300
-0.048130
-0.190340
-0.013990
0.071770
-0.080000
Bear
Stearns
Lehman
Bros.
-0.039760
0.182610
0.066180
0.080000
-0.077420
-0.006990
0.006690
-0.022220
-0.045450
-0.014290
0.016260
0.024000
0.100390
0.045110
-0.014390
-0.005840
0.081480
0.089040
0.133330
0.050280
0.026600
0.039900
0.042110
-0.111110
0.018180
-0.016850
0.114290
-0.106670
-0.098270
0.083330
0.019820
-0.165640 -0.166670
Meckler-media
Merrill
Lynch
Morgan Stanley
Dean Witter
Netscape
-0.067630
0.231770
-0.031710
-0.019650
-0.015660
-0.109090
-0.004080
0.041240
0.019800
-0.030580
0.020150
0.093830
0.095710
-0.014490
0.098740
0.046650
0.045870
-0.010530
0.079430
0.069310
0.074070
0.118970
0.010310
-0.007400
-0.063230
-0.074380
0.073210
-0.094710
-0.045050 -0.083080
0.000000 -0.010070
0.905660 0.063860
-0.128710 -0.102560
-0.016170
0.197180
-0.110040
-0.008850
-0.013390
-0.110860
0.050690
-0.024330
0.097260
-0.075180
-0.051850
0.031250
0.075560
0.051890
0.015700
0.022080
0.110500
-0.064450
0.102300
0.051440
0.019890
0.179360
0.049770
-0.096260
-0.084010
-0.013940
0.121910
-0.156850
-0.039400
-0.037110
-0.025560
-0.048120
30
Paine
Webber
Raymond
James
-0.152610
0.335070
-0.016040
0.080430
-0.045450
-0.142860
0.049140
0.023670
0.069360
-0.135350
-0.106920
0.140850
0.197280
0.010360
0.035900
-0.054650
0.089470
-0.072460
0.136460
0.073730
0.034330
0.067220
0.019530
-0.099620
-0.088510
0.014080
0.097220
-0.097050
-0.047010
-0.007410
-0.007760
-0.053030
-0.125540
0.217820
0.165530
-0.003500
0.128840
-0.135510
-0.086490
-0.014910
0.006020
-0.071860
-0.113030
0.116790
0.209150
-0.032430
0.137650
-0.137930
0.043660
0.005490
0.038250
0.003370
-0.057890
0.154410
0.087380
-0.035710
-0.027780
-0.050000
0.064960
-0.070920
-0.048550
-0.040320
-0.003030
-0.016950
Yahoo!
VW NYSE,
AMEX, and
NASDAQ
-0.037270
0.107040
-0.001650
0.013290
-0.023680
0.013850
0.006520
-0.019240
0.039930
-0.020760
0.012420
0.010900
0.040190
0.017540
0.012330
0.005450
0.025010
-0.025510
0.029420
0.005130
-0.000760
0.039340
0.000610
0.018040
-0.017350
0.019450
0.031330
-0.024090
-0.045740
0.009830
0.009500
-0.027380
Exhibit 6
Date
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
30-Dec-94
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
31-Jan-96
29-Feb-96
29-Mar-96
30-Apr-96
31-May-96
28-Jun-96
31-Jul-96
30-Aug-96
30-Sep-96
31-Oct-96
29-Nov-96
31-Dec-96
31-Jan-97
28-Feb-97
A G Edwards
0.014490
0.150000
-0.086210
0.013700
-0.060000
0.043480
0.020830
0.224490
-0.016000
0.039770
-0.010930
0.000660
0.088890
-0.005100
0.098050
-0.042250
0.065100
-0.115740
0.052360
-0.034830
0.032370
-0.055280
0.090430
0.064780
0.009220
0.022830
0.045890
0.025750
0.046030
0.081120
0.011150
0.044120
Bear
Stearns
Lehman
Bros.
-0.051470
0.141090
-0.123290
0.015630
-0.029230
-0.016000
0.081300
0.136840
-0.013330
0.114860
0.038180
0.055560
0.035090
-0.061020
0.042420
-0.075580
0.101890
-0.086210
0.157230
0.060870
0.020620
0.015150
0.014180
-0.020730
-0.047620
0.045560
-0.005350
0.016130
0.170370
0.013640
0.076230
0.055000
0.050000
0.039680
-0.092310
0.050850
-0.037100
-0.008400
0.152540
0.069120
-0.006900
0.083330
0.015380
0.107590
0.017140
0.064040
-0.015870
-0.064520
0.042530
-0.060770
0.205880
-0.032200
0.080810
-0.051400
-0.032510
0.010200
-0.065660
-0.084320
0.224850
-0.028990
0.161190
0.077250
0.007970
0.065140
Meckler-media
-0.011360
-0.275860
-0.031750
-0.311480
-0.071430
0.410260
-0.181820
0.155560
0.730770
0.566670
0.517730
0.411210
-0.006620
0.126670
-0.112430
-0.373330
0.510640
-0.098590
-0.185550
-0.155880
0.090910
0.333330
0.156250
0.094590
-0.172840
0.044780
0.028570
-0.034720
0.165470
-0.024690
0.050630
0.337350
Merrill
Lynch
Morgan Stanley
Dean Witter
Netscape
0.046430
0.115490
-0.147690
0.143830
-0.034920
-0.059210
0.030910
0.119450
0.036590
0.070590
0.038680
0.117020
0.057140
0.042970
0.084600
-0.112000
0.004680
-0.081080
0.120290
0.013190
0.054230
-0.006170
0.077430
0.005790
-0.068330
0.014490
0.075510
0.066410
0.146620
0.015580
0.032210
0.144730
0.065930
0.155460
-0.109320
0.052310
-0.091010
-0.002110
0.019070
0.120580
0.004750
0.031540
0.095320
0.077180
0.023720
0.038860
0.116550
-0.099790
-0.008620
-0.065220
0.185740
-0.015750
0.109330
-0.030290
-0.014930
-0.007580
-0.004070
-0.020510
0.041880
0.013570
0.196520
-0.049900
0.003500
0.105030
31
0.262630
0.408000
0.571020
0.005420
0.181650
-0.379000
-0.186270
0.469880
0.115780
-0.085400
-0.365460
-0.104430
0.310950
-0.045820
0.262710
0.017900
-0.334070
-0.231020
Paine
Webber
Raymond
James
0.032000
0.015190
-0.115380
0.060870
-0.098690
0.100920
0.000000
0.166330
-0.071940
0.062020
0.160290
-0.044300
0.086090
-0.055120
0.025970
0.120250
0.011070
-0.101120
0.037500
-0.036390
0.106920
-0.051140
0.053650
0.085710
-0.115790
-0.012140
0.018180
0.119050
0.154260
0.041290
0.280000
-0.089580
-0.068970
0.185190
-0.026250
-0.032260
-0.041670
-0.026090
0.095710
0.163930
-0.023100
0.014490
0.050000
0.059320
0.122580
0.011490
-0.007270
-0.011490
0.052330
-0.056570
0.035290
0.005680
0.021240
0.005560
0.005520
-0.001320
-0.077350
0.119760
0.041500
0.005150
0.164100
0.065550
0.070540
0.034880
Yahoo!
-0.058820
-0.250000
-0.142860
0.090280
0.082800
-0.070590
-0.031650
-0.111110
0.992650
-0.107010
VW NYSE,
AMEX, and
NASDAQ
0.030410
0.042830
-0.018650
0.014870
-0.037070
0.012750
0.020550
0.039620
0.026970
0.024880
0.034160
0.030840
0.040670
0.009340
0.036390
-0.011150
0.042970
0.015400
0.028090
0.016050
0.011200
0.025130
0.026720
-0.007660
-0.053390
0.032220
0.052990
0.013940
0.065730
-0.011350
0.053040
-0.000880
Exhibit 6
Date
A G Edwards
31-Mar-97
30-Apr-97
30-May-97
30-Jun-97
31-Jul-97
29-Aug-97
Source:
Bear
Stearns
Lehman
Bros.
Meckler-media
Merrill
Lynch
Morgan Stanley
Dean Witter
Netscape
-0.135140 -0.105470
0.062500 0.110920
-0.245100 0.115790
-0.012990 0.125000
0.065790 0.181340
-0.006170 -0.124050
Paine
Webber
Raymond
James
Yahoo!
32
VW NYSE,
AMEX, and
NASDAQ
-0.044390
0.042460
0.071250
0.044200
0.076310
-0.036450
Exhibit 6
EW NYSE,
AMEX, and
NASDAQ
0.005760
-0.053810
0.007100
-0.019420
-0.050770
0.013800
-0.047450
0.089620
0.000270
-0.020890
-0.031410
0.005050
0.122760
0.047140
-0.008530
-0.011290
0.022930
0.003470
0.019510
-0.003410
-0.056140
0.018960
0.053270
0.029130
0.043400
0.062360
0.047720
0.015840
0.036630
0.008960
33
Exhibit 6
EW NYSE,
AMEX, and
NASDAQ
-0.073610
0.022110
-0.060490
0.024620
-0.006280
-0.034530
0.116820
0.074950
0.033090
-0.019610
0.000710
0.022010
0.034700
0.015590
-0.015510
-0.270850
-0.052300
0.027940
0.078110
0.062010
0.034370
0.015250
-0.017020
0.048480
0.000550
-0.023710
0.018700
-0.011780
-0.036700
0.019540
0.063130
0.002790
34
Exhibit 6
EW NYSE,
AMEX, and
NASDAQ
0.017030
0.030680
0.027370
-0.008330
0.031610
0.019290
0.004470
-0.050950
-0.008220
-0.012170
-0.045810
0.015750
0.022040
-0.026720
0.046650
0.005380
-0.027290
-0.109790
-0.080490
-0.056330
0.036650
-0.003870
0.085250
0.133650
0.077820
0.031020
0.030340
-0.034500
0.034920
0.028570
0.008670
0.023860
35
Exhibit 6
EW NYSE,
AMEX, and
NASDAQ
-0.025390
0.036450
0.149480
0.052010
-0.014120
-0.032890
0.005500
-0.039700
0.027280
-0.024440
0.011930
0.016320
0.067730
0.035650
0.066740
-0.007910
0.030880
-0.012760
0.037950
0.011970
0.014100
0.040400
0.025790
0.040090
-0.024370
0.016120
0.048920
-0.009490
-0.046020
-0.010820
-0.000270
-0.026570
36
Exhibit 6
EW NYSE,
AMEX, and
NASDAQ
0.015470
0.036790
0.004500
-0.002400
-0.040570
-0.012860
0.027710
0.027990
0.018740
0.025980
0.020500
0.048690
0.055180
0.030380
0.025990
-0.040580
0.017200
0.009780
0.033290
0.031540
0.024120
0.057330
0.061050
-0.030600
-0.078620
0.044770
0.028970
-0.019970
0.024770
-0.001420
0.061720
-0.010430
37
Exhibit 6
EW NYSE,
AMEX, and
NASDAQ
-0.047880
-0.021390
0.085170
0.044240
0.048620
0.027020
38
Q1. What difficulties will you face in estimating cost of equity for an unlisted firm vis-a-vis listed firms?
Q2. Ameritrade doesnt have beta estimate given very short period of trading. Exhibit 4 provides various choices of comparable firm
What comparable firms do you recommend as the appropriate benchmakrs for evaluatng the risk of ameritrade's plann
Q3. Using the stock price and returns data in exhibits 4 and d5, and the capital structure information in exhibt , calculate the asset b
Q4. How should Joe Ricketts, the CEO of Ameritrade, view the cost of captail estimat eyou have calculated.
Also, complete Lockheed and subsidy questions from today's class.
The cost of capital for a firm is the cost that it pays for the capital,which it uses to operate.to do any operation a firm nee
the firm is required to pay interest on the borrowed capital.this interest is the cost of debt(borrowing) that has to be paid
therefore Ke = Rf+(Rm-Rf)
ke is also the expected return of equity.
where Rf is risk free returns and Rm-Rf is risk premium i.e market returm
For ameritrade the transaction income is about 66%of total income so the comparable firms are:charles schwab and qu
Returns as compared to previous period is
R = Pf-Pi+D/Pi
beta equity = avg of beta of charles schwub and quick reilly = 2+2.31/2
assuming beta debt for american markets to be = 0.20
Rf=6.61% riskfree returns (on 30 yrs us govt securities)
Rm=14%(large company stocks)
e/v=e/e+d = 66989094/(66989094+690367649)=
d/v =
0.912
Weighted avg Ke =
weighted avg Kd=
.066+2.16*.074
0.066+0.20*.074
=
=
0.089
0.225
0.081
ucture information in exhibt , calculate the asset betas for comparable firms.
it uses to operate.to do any operation a firm needs capital(money).A firm can borrow money from various entities e.g banks
s the cost of debt(borrowing) that has to be paid by the firm.a firm can also sell a part of its ownership(shares) and thus raise money.the share holders
uity d is debt i.e market value of the debt in capital structure,e is market value of equity.
2.16
22.50%
8.10%
s expected return on the money that the shareholders gave to the firm is the firms cost of equity capital.thus the total cost of capital for a firm is the cost
.thus the total cost of capital for a firm is the cost of debt+cost of equity.the cost of capital for afirm is calculated on weighted average basis i.e in the av
alculated on weighted average basis i.e in the average cost of capital what is the weight of debt and equity.