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Chapter_02web - EXERCISES FOR CHAPTER 2 With Solurions...

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EXERCISES FOR CHAPTER 2 With Solurions Exercise 1. a. A firm’s balance sheet lists $3,067 million in shareholders’ equity and $1,204 million in liabilities. What is the carrying value of its assets? b. This firm’s equity trades at $4,569 million. What is its price-to-book ratio? (Refer to pp. 30, 39,40) Solution a. Assets = Shareholders’ equity + Liabilities = $3,067 + 1,204 = $4,271 million b. P/B = $4,569/3,067 = 1.49 Exercise 2. Chubb Corporation, the insurer, reported net income of $222.9 million for 2002. It also reported gains on investments of $332.9 million and foreign currency translation gains of $16.5 million, both as part of “other comprehensive income” in its Statement of Shareholders’ Equity. What was Chubb’s comprehensive income for 2002? (Refer to p. 36) Solution Comprehensive income = net income + other comprehensive income = $222.9 + (332.9 + 16.5) = $572.3 million
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Exercise 3. Go to the 2002 10-K filing for Chubb Corporation. Get to the SEC filings through the links on the book’s web page. Find the following in the financial statements.
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