Question

1 2 3 4 5 6 7 8 9 10 time remaining 57:30 your broker charges you 2.5% commission on the market value of bonds you buy or sell. if you wish to buy a par value $1,000 bond from cuyahoga county with a market rate of 86.681, approximately how much will you owe your broker?

a. $25.00
b. $21.67
c. $89.18
d. $27.17

Answer 1

The commission owed to the broker for buying a par value of $1000 bond with a market rate of 86.681 and a 2.5% commission rate would be approximately $21.67. b. $21.67

Step-by-step explanation:

The student is asking how much commission they would need to pay their broker if they wanted to buy a par value $1000 bond at a market rate of 86.681 with the broker charging a 2.5% commission. To find the commission, you multiply the market price of the bond by the commission rate. In this case, the current market value of the bond is 86.681% of $1000 par value, which equals $866.81. Multiplying this by the 2.5% commission rate (0.025) gives us the amount of commission owed:

$866.81 × 0.025 = $21.67025

The approximate commission owed to the broker would therefore be $21.67, corresponding to option B.