Commonwealth Bank Australia (CBA) is currently trading in the market as follows: [table]
Stock | Bid | Ask CBA | $182.00 | $182.20
[/table] If you wish to sell 100 shares of CBA, and the commission is 1%, what proceeds would you receive if you placed a market sell order for CBA (round to the nearest dollar)?

Question

BlackTom AI · Accepted Answer

First, let's restate the scenario: you are selling 100 shares of CBA using a market order, and the current bid price is $182.00 per share while the ask is $182.20. Since you are selling, you will transact at the bid price (the price buyers are willing to pay).

Option A: $18,038. This would imply a slight undercounting of the effect of the 1% commission or a misapplication of the bid price. If you sold at 182.00 per share, 100 shares would yield 18,200 before costs, not 18,038, so this value is inconsistent with the given bid.

Option B: $18,018. This reflects selling 100 shares at the bid price of $182.00 for a total of 18,200, and then deducting a 1% commission on the trade ($18,200 × 0.01 = $182), leaving 18,200 − 182 = 18,018. This aligns with standard market‑order execution and typical commission calculation.

Option C: $18,382. This would correspond to a higher net than the gross value at the bid price, or an incorrect application of commission. Since the gross value at the bid is only 18,200, a net of 18,382 is impossible under a straightforward sale with commission.

Option D: $18,402. Similar to C, this exceeds the gross proceeds obtainable at the bid price (18,200) even before commissions, so it cannot be correct given the stated numbers.

Option E: $18,200. This would be the gross proceeds before any commission is charged. If a 1% commission is applied, the net would be lower than this amount, namely 18,018 as in Option B. Therefore E neglects the commission.

In summary, the correct reasoning is: sell at the bid price of $182.00 per share for 100 shares → gross 18,200; apply 1% commission on the trade value (0.01 × 18,200 = 182); net proceeds = 18,200 − 182 = 18,018. The other options either ignore the commission or misstate the gross or net amounts based on the bid price.

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