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?

For the 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?" We note that when an investor buys a $1,000 par value bond quoted at 86.681, the investor pays 86.681% of the face value of the bond. Thus, the amount paid for the bond = 86.681% of $1000 = 0.86681 x $1,000 = $866.81 Therefore, the amount to be paid to the broker = 2.5% of $866.81 = 0.025 x $866.81 = $21.67 Therefore, you owe your broker approximately $21.67

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