CMA Intermediate · Financial Management and Business Data Analytics · Capital Market
An investor buys 200 shares of Tara Industries on the NSE at Rs 500 per share and the broker charges brokerage at 0.5% of the transaction value. Ignoring all other charges and taxes, what is the total cash outflow for the purchase?
The total outflow is Rs 1,00,500. The shares cost 200 x Rs 500 = Rs 1,00,000, and brokerage of 0.5% adds Rs 500 for a buyer. Subtracting brokerage would apply to a sale, not a purchase.
- ARs 1,00,000
- BRs 1,00,500Correct
- CRs 99,500
- DRs 1,05,000
Explanation
Transaction value = 200 x 500 = Rs 1,00,000. Brokerage = 0.5% x 1,00,000 = Rs 500. For a purchase the brokerage is added, giving Rs 1,00,500. Rs 99,500 wrongly subtracts brokerage, as would be done for a sale.
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