Question

Grace wishes to buy a corporate bond with a par value of $1,000 from SFT Legal. If Grace’s broker charges her a commission of 4% of the market value of each bond, and SFT Legal has a market rate of 103.563, how much commission does Grace owe her broker? a. $107.56 b. $41.43 c. $40.00 d. $44.14

Answer 1

The correct response is $41.43...

:)

Answer 2

The par value or the face value of the share is the price that one gets while issuing.

So, par value is $1000

A commission of 4 % is charged by the broker. The market rate is $103.563, so commission becomes as per par value =

`(4)/(100)*1035.63=41.425`

Hence, option B $41.43 is the correct answer.