Question

Broker P charges a commission of $8.50 for every ten shares of stock, and Broker Q charges a fee of $65.00 for every thousand dollars bought or sold. If stock in Ergar Appliances costs $18.75 per share and you buy 500 shares, which broker is the better deal, and by how much? a. Broker Q will charge $375.35 less than Broker P. b. Broker Q will charge $160.22 less than Broker P. c. Broker P will charge $184.38 less than Broker Q. d. Broker P will charge $425.00 less than Broker Q.

Answer 1

we are given with two charges: in which we can use to compute the difference of the two brokers when the share is 500 costing 18.75 each. In this case, broker P is equal to P8.50/10 * 500 equal to P425. Broker Q is equal to $65/ 1000 * (18.75*500) equal to P609.375. The difference is P184.38

Answer 2

c. Broker P will charge $184.38 less than Broker Q

Explanation:

Total number of shares bought = 500

Price of 1 share = $18.75

So, total price of 500 shares =
`500*18.75=9375`

Broker P :

He charges a commission of $8.50 for every ten shares of stock. So, his commission here becomes:
`8.50*(500)/(10) =425`

He will charge $425.

Broker Q:

He charges a fee of $65.00 for every thousand dollars bought or sold.

Now, the shares are bought for $9375 which means $9000+375 shares.

His commission becomes :
`65*9` +
`(375)/(1000)*65`

= 585+24.375 = $609.375

He will charge $609.375

Difference between the charges of both the brokers :

=
`609.375-425`=184.375 ≈$184.38

Hence, option C is correct.