A customer places an order to buy 100 shares of ABC at the market. The execution report shows the trade occurring at $45.63. The firm sends out a confirmation which states that the trade occurred at $45.38. Which statement is TRUE?

A. The customer will pay $4,538 plus any applicable commissions
B. The customer will pay $4,563 plus any applicable commissions
C. The customer can DK the trade
D. The customer will pay $4,538 and can submit a claim to arbitration for an additional $25.00.

B. The customer will pay $4,563 plus any applicable commissions

Explanation:

When investors purchase shares of stock at the market, the price paid contains two elements

1. Market Price of the stock and

2. Broker Commission.

Broker Commission

The second component of a share purchase price is the broker commission which refers to the fees paid brokers who are middlemen that help investors facilitate share purchase transactions.

Individual investors usually engage in stock transactions through online brokers, whereas institutions use the services of an investment bank. Brokerage fees represent the commission paid to these middlemen.

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