Securities Trader Representative (Series 57) Practice Exam

A broker-dealer executes an agency transaction selling 3,000 shares at $49.00, less a commission of 10 cents per share. The broker-dealer will report the sale at what price?

1. 48.90

2. 49.00

3. 49.10

4. 49.50

The correct answer is: 49.00

In an agency transaction, the broker-dealer acts as an intermediary between the buyer and the seller, executing the trade on behalf of the client. When reporting the sale price in this context, it is important to focus on the price at which the shares were sold to the buyer, which does not include the brokerage commission. In this scenario, the shares were sold at a price of $49.00 per share. The commission of 10 cents per share is considered a cost to the seller and typically would be deducted from the proceeds after the sale, rather than affecting the reported sale price. Therefore, the correct reporting price remains the gross sale price of $49.00. The nuances of reporting are crucial to understand as they ensure clarity in transactions. The price reported by the broker-dealer is the price at which the transaction occurred, excluding any fees or costs imposed on the transaction post-sale. This reflects standard practices in trading where the commission details are typically provided separately from the sale price to prevent confusion about the actual transaction value.