Transaction costs -i n In late December you decide for tax purposes to sell a losing position that you hold in twitter, which is listed on the NYSE, so that you can capture the loss and use it to offset some capital gains, thus reducing your taxes for the current year. However, since you still believe that twitter is a good long terme investment you wish to buy back you position in February the following year. To get this done you call you Charles schwab brokerage account manager and request that he immediately sell you 1,000 shares of twitter and then in early February buy them back. Charles Schwab charges a commission of $4.95 for online stock trades and for roker-assisted trades ther is an additional $25 service charge sot the total commission is $29.95

a. suppose that your total transaction costs for selling the 1,000 shares of twitter in December were $59.95. What was the bid/ask s[read for twitter at the time your trade was executed?

b. given that twitter is listed on the NYSE do your total transaction costs for December seem reasonable? explain why or why not.

Twitter is listed on the NYSE, a broker market. So had Charles schwab routed the order to the NYSE, it could have been executed against a buy order and total transaction costs would have been only the 29.95 brokerage commission. But the transaction costs included half the bid/ask spread per share traded, so either (I) the order went to the NYsE, no public buy order was available and the market maker bought the 1,000 shares for her inventory (at a cost of half the bid/ask spread per share) or (ii)Charles schwab routed the order to a dealer market like NASDAQ AND A MARKET MAKE ADDED THE SHARES TO HER INVENTOR (at half the spread per share).

This state is true or false?

c. the bid/ask spread for twitter at the time your trade was executed is

d. your total round trip transaction costs for both selling and buying the shares is

What could you have done differently to reduce the total costs?