Texts: You would like to purchase a share in the Al Baraka Company through a brokerage account. The Broker advertises an $8 commission for trades using their phone-based interactive voice response system. You call and learn that the bid price is $262,825.00 and the ask price is $263,790.00, and you submit your order for one share.
Required:
i. What is the current bid/ask spread for Al Baraka Company Class A shares?
ii. If the broker routes your buy order to the KSE, where Al Baraka Company is listed, what's the potential minimum your total transaction costs will be?
iii. If, instead, the broker routes your buy order to KSE, where Al Baraka Company is not listed, what's the potential maximum of your total transaction costs will be?
iv. Regardless of how your trade is executed, based on the bid/ask spread, what is the market value of your trade?