NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Operational Aspects of Investment Management
A portfolio manager buys 500 shares of an Indian company at Rs 400 per share. A broker charges brokerage of 0.20% of the trade value, and there are no other charges. What is the total cash outflow for the purchase?
The total outflow is Rs 2,00,400. The trade value is Rs 2,00,000 and brokerage at 0.20% is Rs 400, which is added to the cost on a purchase. Subtracting it or misplacing the decimal would give a wrong figure.
- ARs 2,00,400Correct
- BRs 2,00,000
- CRs 1,99,600
- DRs 2,00,040
Explanation
Trade value = 500 x 400 = Rs 2,00,000. Brokerage = 0.20% x 2,00,000 = Rs 400. On a purchase, brokerage is added, giving Rs 2,00,400. Rs 1,99,600 wrongly subtracts brokerage, and Rs 2,00,040 uses 0.02%.
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