On a given day a stock 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

To calculate the gross trading profit, we need to find the difference between the selling price (ask price) and buying price (bid price).

Difference = Ask price - Bid price
Difference = $1003.25 - $1000.50
Difference = $2.75

For 500 bonds, the total profit would be:

Total profit = Difference x Number of bonds
Total profit = $2.75 x 500
Total profit = $1375

Therefore, the dealer's gross trading profit for this security was $1,375, which is option A.

On a Given Day a Stock Dealer Maintains a Bid