Diana is trying to choose a broker who will her purchase a par value $1,000 corporate bond from deegan pharmaceuticals. broker p charges a commission of 4.4% of the market value of each bond purchased, and broker q charges a flat fee of $32.50 for each bond purchased. if bonds from deegan pharmaceuticals are selling at 104.682, which broker will give diana the better deal, and by how much?

Broker P will give Diana a better deal.

Further Explanation:

Brokerage commission:

The brokerage commission is charged by the broker on the sales value of the securities sold on the behalf of the owner of the security. Generally, the commission is a fraction of the total sales value or charged at a flat rate. The broker helps the holder of the security in selling the goods and charges a commission for the services.  

Calculate the Broker P’s commission:

The Broker’s P’s commission is $46.06.

Decision regarding the selection of the broker:

The Broker P’s commission for each bond is $46.06 and the commission of Broker Q is $32.50 per bond. The commission of broker Q is lower by $13.56 . Therefore, Diana should choose broker Q as it is charging less commission.

Thus, Broker P will give Diana a better deal.

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Answer details:

Grade: High school

Subject: Accounting

Chapter: Securities

Keywords: Diana, broker, purchase, par, value, corporate, bond, Deegan, Pharmaceuticals, commission, market, value, bond, purchased, Broker, flat fee, bond, purchased,  bonds, Deegan, Pharmaceuticals, selling, broker.