Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A through D please help!! Transaction costs in late December you decide to sell a losing position that you hold in Twitter so you can

A through D please help!!
image text in transcribed
Transaction costs in late December you decide to sell a losing position that you hold in Twitter so you can capture the loss arnt use it to offset some capital gains, thus reducing your taxes for the current year. However, since you believe that Twitter is a good long-torm investment, you wish to buy back your position in February next year. You call your Charles Schwab brokerage account manager and request that he sell your 1.300 shares of Twitter and buy them back in February Charies Schwab charges a commission of $25 for broker-assisted trades. a. Suppose that your total transaction costs for selling the 1,300 shares of Twitter in December were $45.00. What was the bidiask spread for Twitter at the time your trade was execuled? b. Given that Twitter is listed on the NYSE, do your total transaction costs for December seem reasonable? Explain why or why not. c. When your February statement arrives in the mail, you see that your total transaction costs for buying the 1,300 shares of Twittor were \$40.20. What was the bitfask spread for Twitter at the time your trade was executed? d. What are your total found-trip transaction costs for both selling and buying the shares, and what could you have done differently to reduce the total costs? a. The bid/ask spread for Twater, at the time your trade was executed, is $ (Round to four decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance And Financial Markets

Authors: Keith Pilbeam

3rd Edition

023023321X, 978-0230233218

More Books

Students also viewed these Finance questions