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 broker’s bond package will cost jim less money up front, and how much less will it cost him?

Ans. The bond package that represents the less money to be paid is the US treasury package, $1,377.62 less than Fort bend´s bond and $88.89 less than Iwad, but the best deal is with fort bend, since is bought at discount and the money paid in commision is prercieved to be less for the assets adquired.

Explanation:

Hi, well, first, let´s find out what the money to be paid is for all packages.

So, as you can see, you pay less for the US trasury, but you get less in exchange, when compared to Fort Bend and Iwad, but if you see this from another point of view, Jim will actually pay less for the Forth Bed package, this is because this bonds are bought at discount that, when compared to its face value is 8.91% less, in terms of money, that is $222.75 of savings and since the commision is $140 (5 bonds * $28), the total gain is $222.75 - $140 = $83.

On the other hand, for the US Treasury bond, you pay 1.16% more than its par value, plus the commision, the total loss is -$11.60 - $28= -$39.63.

in the case of Iwad, this bonds are also bought at prime, in other words, 7.25% higher than its par value, that represents $72.50 more and the commision is 2*$28= 56, it means that for this package he looses -$129 if he decides to purchase this package, again, this is in terms of what he receives for his money.

I took the liberty to go a little forward with this because I think the main goal of a question like this is to show the reader what they will recieved and what they would have to pay and if this deal is worth your time, risk and money or not.

But yes, Jim will pay the less AMOUNT if he goes for US trasury bonds.

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