The commission for purchasing five round lots of a stock selling for $130 is $65.
<h3>What is round lots of a stock?</h3>
A specified quantity of securities to be traded on an exchange is known as a round lot. In the stock market, a round lot is defined as 100 shares or a bigger number that may be divided in half equally.
1 round lots = 100 shares
5 round lots = 500 shares
The commission structure on a stock purchase is $45 plus $0.04 per share.
For 500 shares, the commission is
= 45 + 0.04×500
= 65
Therefore, the commission for purchasing 500 shares of stock selling for $130 is $65.
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Answer: 1. 18 times
2. Park is in better position
Explanation:
1. Times interest earned is a financial ratio that measures interest coverage. It's essentially to check if a company can pay it's debt payments and is calculated by either EBIT or EBITDA divided by the total interest expense. The higher the better and anything above 2.5 times is usually considered.
Calculating would therefore be,
= $6,120,000 /$340,000
= 18 times.
2. As mentioned in the first answer, for the Times interest earned, the higher it is, the more favourable it is. So Park Company will be considered safer and are most definitely in a better or worse position than its competitor to make interest payments if the economy turns bad. The fact that theirs is 18 means that they can pay off their interest expense 5 times more than their competitor who can only repay 12 times.
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