On a given day a share dealer maintains a bid price of $1000.50 for a bond and an ask price of $1003.25. The dealer made 10 trades which totaled 500 bonds traded that day. What was the dealer's gross trading profit for this security?

Question

Quizplus · Accepted Answer

The dealer's gross trading profit is calculated by the difference between the ask price and the bid price, multiplied by the number of bonds traded. The difference is $1003.25 - $1000.50 = $2.75 per bond. For 500 bonds, the profit is 500 * $2.75 = $1,375.

On a Given Day a Share Dealer Maintains a Bid