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30 December, 15:06

Leona purchased a $1,000 bond having a quoted price of 99.875. She had to pay a 5.5% brokerage fee (of the selling price). What was the total cost of the bond (to the nearest whole cent) ?

$943.82

$1,064.44

$534.77

$2,054.22

None of these choices are correct.

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Answers (1)
  1. 30 December, 17:46
    0
    None of these choices are correct.

    Step-by-step explanation:

    The quoted value of 99.875, means that this bond is sold at 99.875% of the face value and not at a price of $99.875.

    Therefore, calculate price;

    Price = 0.99875 * 1000

    Price = $998.75

    Since brokerage fees is 5.5% of the selling price, Leona will pay additional cost to the quoted price making the total cost to be more than $998.75;

    Brokerage fees = (0.055*998.75) = $54.93

    Total cost = $998.75 + $54.93

    = $1053.68

    Therefore, none of the choices is correct.
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