Question

21. Currently you have $120.00 in cash and 1000 shares of Stock Y in your brokerage account. You plan to sell your 1000 shares of Stock Y and use the proceeds to purchase as many shares of Stock X as possible. Assume you cannot borrow or buy partial shares of stock; you will also buy or sell at the best price offered. NYSE Bid 149.55 $ 127.88 $ Ask 150.45 $ 128.12$ NASDAQ Bid Ask 149.87 $ 150.13 127.70 $ 128.30 Company X $ Company Y $ Based on the quotes provided, the cash balance in your brokerage account after you purchase the shares of Stock X is closest to: A. $(60.89) B. $59.11 C. $87.95 D. $89.24 E. $106.10

Answer 1

Currently there is $120 in cash and 1000 shares of Stock Y

The highest bid price is in NYSE for Stock Y = $127.88

Amount obtained by selling Stock Y in NYSE = 1000*127.88 = $127880

Total Amount in Demat Account = $120+$127880 = $128000

The Lowest ask price is in NASDAQ for Stock X

So, buying Stock X

= 128000/150.13 = 852.59 , converting to whole number 852 shares

So amount invested = 852*$150.13 = $127910.76

Balance in brokerage account

Cash = 128000-127910.76 = $89.24

852 Stock X

answer is D