Question

Marisa wants to buy 200 shares of IBM at $90 per share. Her regular, full-service broker will charge her a

commission of two percent. She can do the transaction with an online broker for a fixed commission of $19.

How much would she save by doing it online?

A

$161

B. $19.

C. $341

$251

Answer 1

Answer:

C. $341

Explanation:

If she buys the 200 shares of IBM at $90 per share

This means that 200 shares will be = 200 x 90 = $18,000

From the question, her regular broker will charge her 2% for this transaction, which is =

2% of 18,000 = $360

However, if she does it online, she pays a fixed commission of $19

Hence she saves = $360 - $19 = $341

Answer 2

Answer:

$341

Explanation:

If she buys from broker, 200 at $90, she will pay $18000 for the shares. Plus, she needs to pay %2 commission, 18000 * 2/100 = 360. In total, she will pay 18000+360 = $18360.

If she buys the shares online, she will pay $18000 for the shares. Plus, she needs to pay $19 fixed commission. In total, she will pay 18000+19 = $18019

The difference is 18360 - 18019 = $341