Question

Assume your customer has 300 shares of common stock with a current market value of 21.25 and 20 first mortgage bonds at par. Both increase 3/4 of a point. What is the increase in the value of his holdings?

Answer 1

Answer:

$375

Explanation:

1 point on stock is equal to $1

1 point on bond is equal to $10

3/4 point on stock is equal to $0.75

3/4 point on bond is equal to $7.5

Since the increase is 3/4 of a point, so the overall increase in the value of bond and shares based on the number of shares and bonds given in question shall be calculated as follows:

Total increase in the value of holding=0.75*300+20*7.5=$375