Question

Diana is trying to choose a broker who will help her purchase a par value $1,000 corporate bond from deegan pharmaceuticals. broker p charges a commission of 4.4% of the market value of each bond purchased, and broker q charges a flat fee of $32.50 for each bond purchased. if bonds from deegan pharmaceuticals are selling at 104.682, which broker will give diana the better deal, and by how much? a. broker p’s commission will be $9.47 less than broker q’s. b. broker p’s commission will be $27.89 less than broker q’s. c. broker q’s commission will be $13.56 less than broker p’s. d. broker q’s commission will be $11.50 less than broker p’s.

Answer 1

Broker q’s commission with a charge of $32.50 will be $11.50 less than broker p’s commission of 4.4%

What is a bond?

A bond is a fixed-income instrument that represents a loan made by an investor to a borrower.

Par value of bond = $1,000

Commission on this by broker p= 4.4% = 1000*(4.4)/100= $44

So, the total price spent to purchase this bond = $1044

Par value of bond = $1,000

Commission on this by broker q= $32.50

So, the total price spent to purchase this bond =1000+32.50 = $1032.50

Difference between both deals = 1044-1032.50 = $11.50

Therefore, broker q’s commission will be $11.50 less than broker p’s.

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Answer 2

Answer:

C. Broker Q's commission will be $13.56 less the Broker P's.

Step-by-step explanation:

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