Question

Your broker charges you 2.5% commission on the market value of bonds you buy or sell. If you wish to buy a par value $1,000 bond from Cuyahoga County with a market rate of 86.681, approximately how much will you owe your broker?
a.
$25.00
b.
$21.67
c.
$89.18
d.
$27.17

Answer 1

Market price = 86.681% of $1,000 = $866.81.
Commission = 2.5% × $866.81 = $21.67 (approximately).

Answer: b. $21.67