jim wants to start investing in bonds. he checks with two brokers to ask them for suggestions of bonds to…

jim wants to start investing in bonds. he checks with two brokers to ask them for suggestions of bonds to buy. broker j, who charges a commission of 3.6% of the market value of all bonds sold, recommends for jim to buy three par value $500 bonds from the city of danville, a par value $1,000 bond from raxin accounting, and two par value $1,000 bonds from united rotators. danville bonds are selling at 114.212, raxin accounting bonds are selling at 79.941, and united rotators bonds are selling at 102.844. broker k, who charges a fee of $28 for each bond sold, recommends that jim buy five par value $500 bonds from fort bend county, a par value $1,000 bond from the u.s. treasury, and two par value $500 bonds from iwad records. fort bend bonds are selling at 91.090, treasury bonds are selling at 101.163, and iwad records bonds are selling at 107.252. based on the current information, which brokers bond package will cost jim less money up front, and how much less will it cost him? a. broker js suggestion will cost jim $59.57 less than broker ks suggestion. b. broker js suggestion will cost jim $62.00 less than broker ks suggestion. c. broker ks suggestion will cost jim $148.57 less than broker js suggestion. d. broker ks suggestion will cost jim $208.07 less than broker js suggestion.

jim wants to start investing in bonds. he checks with two brokers to ask them for suggestions of bonds to buy. broker j, who charges a commission of 3.6% of the market value of all bonds sold, recommends for jim to buy three par value $500 bonds from the city of danville, a par value $1,000 bond from raxin accounting, and two par value $1,000 bonds from united rotators. danville bonds are selling at 114.212, raxin accounting bonds are selling at 79.941, and united rotators bonds are selling at 102.844. broker k, who charges a fee of $28 for each bond sold, recommends that jim buy five par value $500 bonds from fort bend county, a par value $1,000 bond from the u.s. treasury, and two par value $500 bonds from iwad records. fort bend bonds are selling at 91.090, treasury bonds are selling at 101.163, and iwad records bonds are selling at 107.252. based on the current information, which brokers bond package will cost jim less money up front, and how much less will it cost him? a. broker js suggestion will cost jim $59.57 less than broker ks suggestion. b. broker js suggestion will cost jim $62.00 less than broker ks suggestion. c. broker ks suggestion will cost jim $148.57 less than broker js suggestion. d. broker ks suggestion will cost jim $208.07 less than broker js suggestion.

Answer

Explanation:

Step1: Calculate total market - value of bonds recommended by Broker J

For Danville bonds: 3 bonds with par - value $500 each, selling at 114.212. Market value of Danville bonds = $3\times500\times\frac{114.212}{100}=3\times500\times1.14212 = 1713.18$. For Raxin Accounting bond: 1 bond with par - value $1000, selling at 79.941. Market value of Raxin Accounting bond = $1\times1000\times\frac{79.941}{100}=1000\times0.79941 = 799.41$. For United Rotators bonds: 2 bonds with par - value $1000 each, selling at 102.844. Market value of United Rotators bonds = $2\times1000\times\frac{102.844}{100}=2\times1000\times1.02844 = 2056.88$. Total market value of bonds recommended by Broker J = $1713.18 + 799.41+2056.88=4569.47$. Commission of Broker J = $4569.47\times0.036 = 164.50092$. Total cost from Broker J = $4569.47+164.50092 = 4733.97092$.

Step2: Calculate total market - value of bonds recommended by Broker K

For Fort Bend County bonds: 5 bonds with par - value $500 each, selling at 91.090. Market value of Fort Bend County bonds = $5\times500\times\frac{91.090}{100}=5\times500\times0.9109 = 2277.25$. For U.S. Treasury bond: 1 bond with par - value $1000, selling at 101.163. Market value of U.S. Treasury bond = $1\times1000\times\frac{101.163}{100}=1000\times1.01163 = 1011.63$. For Iwad Records bonds: 2 bonds with par - value $500 each, selling at 107.252. Market value of Iwad Records bonds = $2\times500\times\frac{107.252}{100}=2\times500\times1.07252 = 1072.52$. Total market value of bonds recommended by Broker K = $2277.25+1011.63 + 1072.52=4361.4$. Fee of Broker K = $28\times(5 + 1+2)=28\times8 = 224$. Total cost from Broker K = $4361.4+224 = 4585.4$.

Step3: Find the difference in costs

Difference = $4733.97092−4585.4 = 148.57092\approx148.57$. Broker K's suggestion costs less.

Answer:

c. Broker K's suggestion will cost Jim $148.57 less than Broker J's suggestion.