Question

Can someone please help me with this question???? its an exam study guide and i dont understand it

Josef owns four par value $1,000 bonds from Dowc Beverage Co. Each bond has a market value of 104.561 and gives 9.2% interest. Josef also owns 170 shares of stock in Dowc Beverage Co. Stock in Dowc Beverage Co. has a share price of 26.25 and pays a dividend of $2.38. If the broker Josef employed to purchase these stocks and bonds charges a commission of $72 for each ten shares of stock bought or sold and a commission of 4% of the market value of each bond bought or sold, which aspect of Josef’s investment in Dowc Beverage Co. has a greater percent yield, and how much greater is it?
a.
The stocks have a yield 2.15 percentage points higher than that of the bonds.
b.
The stocks have a yield 0.27 percentage points higher than that of the bonds.
c.
The bonds have a yield 1.35 percentage points higher than that of the stocks.
d.
The bonds have a yield 2.08 percentage points higher than that of the stocks.

Answer 1

If the broker Josef employed to purchase these stocks and bonds charges a commission of $72 for each ten shares of stock bought or sold and a commission of 4% of the market value of each bond bought or sold, then the bonds have a yield 1.35 percentage points higher than that of the stocks.

Explanation: