equity

chandniwadhwani92
Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

equity

Postby chandniwadhwani92 » Mon Feb 09, 2015 5:27 pm

WHAT IS COMMISSION ON SALES AND COMMISSION ON PURCHASE IN LEVERAGE POSITION while calculating margin transactions

Margin TRANSACTIONS
SHARES PURCHASED- 1000
PURCHASE PRICE PER SHARE 100
ANNUAL DIVIDEND PER SHARE $2
INITIAL MARGIN REQUIREMENT 40%
CALL MONEY RATE 4%
COMMISSION PER SHARE $0.05
STOCK PRICE AFTER ONE YEAR $110

Calculate leverage ratio
INVESTOR RETURN ON MARGIN TRANSACTION IF STOCK IS SOLD AT THE END OF ONE YEAR

TOTAL PURCHASE PRICE=1000*100=1000000
initial margin_ 40%*100000=40000
remaining 60000 borrowed
Commission on purchase- 1000*0.05=$50

My question
what is this commission on purchase??

At the end of one year stock value 1000*110=110000
gain of 9950
Commission on sales 1000*0.05

MY question
what is commisssion on sales

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

equity

Postby edupristine » Tue Feb 10, 2015 5:15 am

Hi, commission per share is $0.05. commission is paid at the time of purchase and sale of shares. commission is purchased at the time of purchasing the share to the dealer or broker and commission on sale is received when shares are sold.


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