Question

Leona purchased a $1,000 bond having a quoted price of 99.875. She had to pay a 5.5% brokerage fee (of the selling price). What was the total cost of the bond (to the nearest whole cent)?

$943.82
$1,064.44
$534.77
$2,054.22
None of these choices are correct.

Answer 1

None of these choices are correct.

The total price of the $1000 bond is $105.37 (rounded to nearest cent)

Step-by-step explanation:

Give the selling price of a $1000 bond = $99.875

According to question, Brokerage fee = 5.5% of $99.875

`5.5 \% \text { of } \$ 99.875=(5.5)/(100) * 99.875=\$ 5.493`

Total Cost of the bond is calculated by the formula,

Total Cost = The selling Price + Brokerage Fee

Total Cost = $99.875 + $5.493

Therefore Total cost =$ 105.368

or, the total price of the $1000 bond is $105.37 (rounded to nearest cent)

Answer 2

None of these choices are correct.

Step-by-step explanation:

If a bond is quoted at 99.875, it means that it is sold at 99.875% of the face value;

Face value = 1000

Therefore, Price = 0.99875 * 1000

Price = $998.75

If Leona pays 5.5% of the selling price, it means that she is paying additional cost which will make the total cost more than the quoted price;

5.5% of 998.75 is;

0.055*998.75 = $54.93

The total cost = $998.75 +$54.93

= $1053.68

Therefore, none of the given choices is correct.