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Broker rate of commission on sale

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Reference no: EM131083208

An investor bought 7,800 Ordinary Shares (nominal value £0.50) at £3.15 each.

(a) Calculate the cost of the shares.

Broker's commission on purchase was 0.5% of the nominal value of the shares.

(b) Calculate the broker's commission and the total cost of the shares, including commission.

At the end of 3 years, the shares were sold for £4.10 per share. The broker's rate of commission on sale was 0.85%, and was calculated on the nominal value.

(c) Calculate the proceeds from the sale, net of commission.

The dividends declared on the nominal value of the ordinary shares were

Year 1         Year 2          Year 3

11%             10.5%          4%

(d) Calculate the total dividends received by the investor.

(e) Compare the total paid on purchase with the total received (net) from dividends and sale.

Reference no: EM131083208

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