Computers are great when they work……

Posted by & filed under Accounting Principles, Advanced Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting.

The Knight Capital Group announced that losses they sustained on Wednesday, August 1, were the result of a computer glitch and now threaten the stability of the Jersey City firm. At the heart of this, the firm lost $440 million when it sold stocks that it accidentally bought Wednesday morning.

Questions:

1. On Thursday, what was the share price of Knight Capital?
2. If the amount in #1 was down 63% from Wednesday’s close, what was the share price at Wednesday’s close?
3. If the amount you calculated in #2 was down 32% from Tuesday’s close, what was the share price on Tuesday, before the computer glitch?
4. Based on the article, how much has Knight Capital lost this year in total?

Source:

Popper, N. (2012). Knight Capital Says Trading Glitch Cost It $440 Million. The New York Times, August 2 (Retrievable online at http://dealbook.nytimes.com/2012/08/02/knight-capital-says-trading-mishap-cost-it-440-million/?hp)