The current price of HR Consulting common stock is $ 200 per share. Smart Broker
ID: 2757051 • Letter: T
Question
The current price of HR Consulting common stock is $200 per share. Smart Brokerage Corporation charges a transaction cost of 2.5% of the total amount of a transaction. How much would an investor receive from selling 100 shares of ABC's common stock?
The current price of MassBank common stock is $40 per share. Smart Brokerage Corporation charges a transaction fee of 3.5% of the total amount of a transaction. What would the purchase of 100 shares of MassBank common stock cost? $________
The bid price of MassNet Corporation is 11.70 and the offer price is 12.50.
a. Ignoring brokerage fees, an investor will have to pay $_____ to buy 60 of MassNet common stock directly from the dealer;
b. Ignoring brokerage fees, an investor will receive $_______ from selling 95 of MassNet common stock directly from the dealer.
Explanation / Answer
Answer.
1. Calculation of investor net reciept from sale of 100 share of ABC common stock.
Transaction cost of 2.5% of the total amount of a transaction
100 shares x $200 per share = $20,000
Less 2.5% of $20,000 = $500
Net reciept = $20,000 - $500 = $19,500.
2. MassBank common stock cost =
100 share x $40 per share = $4000
$4000 x 3.5% = $140
Total cost = $4,000 + $140 = $4,140
3. A Bid is the price selected by a buyer to purchase a stock, while the Offer is the price at which the seller is offering to sell the stock.
A. An investor will have to pay $_____ to buy 60 of MassNet common stock directly from the dealer;
No of share = 60
Bid price = $11.70
60 x $11.70 = $702
B. An investor will receive $_______ from selling 95 of MassNet common stock directly from the dealer.
No of share = 95
Bid price = $12.50
Net received = 95 x $12.50 = $1,187.50
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