Question

NYSE NASDAQ

Bid Ask Bid Ask
Compasny X $149.55 $150.45 $149.87 $150.13
Company Y $127.88 $128.12 $127.70 $128.30

Currently you have $120.00 in cash and 1000 shares of Stock Y in your brokerage account. You plan to simultaneously sell 1000 shares of Stock Y, then purchase as many shares of Stock X as possible. Assume you cannot borrow or buy partial shares of stock; you will also buy or sell at the best price offered. Based on the quotes provided, the cash balance in your brokerage account after you purchase the shares of Stock X is closest to:________

a. $(60.89)
b. $59.11
c. $87.95
d. $89.24
e. $106.10

Answer 1

Option d ($89.24) is the correct option.

Step-by-step explanation:

The given values are:

In cash,

= $120

Throughout stock Y,

= 1000 shares

Throughout NYSE, the stock Y would be

= $127.88.

Amount procured by offering to buy the Y stock throughout NYSE will be:

=
`1000* 127.88`

=
`127880`

The total amount throughout the Demat account will be:

=
`120+127880`

=
`128000`

For stock X, the minimum lowest price would be in NASDAQ,

Now,

The buying stock X will be:

=
`(128000)/(150.13)`

=
`852.59` i.e.,
`852 \ shares`

The invested amount will be:

=
`180* 150.13`

=
`127910.76`

So the cash amount in brokerage a/c will be:

=
`128000-127910.76`

=
`89.24`