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31 March, 12:09

You would like to purchase one Class A share of Berkshire Hathaway through your Scottrade brokerage account. Scottrade charges a $6 commission for online trades. You log into your account, check the real-time quotes for Berkshire Hathaway (you see a bid price of $262 comma 875 and an ask price of $263 comma 810 ) and submit your order. a. What is the current bid/ask spread for Berkshire Hathaway Class A shares?

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  1. 31 March, 14:17
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    The current bid/ask spread for Berkshire Hathaway Class A shares is $935

    Explanation:

    The computation of the current bid/ask price is shown below:

    The Current bid/ask price = Ask price - Bid price

    = $263,810 - $262,875

    = $935

    The commission amount should be ignored in the computation part. Hence, it will not be considered as it is not relevant.
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