Brokerage fees charged by a stockbroker is an example of:
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A. B. C. D.C
The correct answer to the question "Brokerage fees charged by a stockbroker is an example of" is C. Transaction cost.
Explanation: Brokerage fees are the charges or fees imposed by a stockbroker for executing transactions on behalf of investors in buying or selling stocks, bonds, or other securities. These fees are typically charged as a percentage of the total value of the transaction or as a flat fee per transaction.
Transaction costs refer to the expenses incurred when buying or selling financial assets. They include various fees, commissions, and charges associated with executing investment transactions. Brokerage fees are a specific type of transaction cost, directly related to the services provided by stockbrokers.
A. Margin profit: Margin profit refers to the profit made by borrowing funds from a brokerage firm to make investments. It is unrelated to brokerage fees.
B. Insurance premium: Insurance premiums are payments made by individuals or businesses to an insurance company in exchange for insurance coverage. They are not related to brokerage fees.
C. Transaction cost: Transaction costs, as explained above, encompass the fees and charges associated with executing investment transactions. Brokerage fees fall under this category.
D. Capital expenditure: Capital expenditure refers to the funds spent by a company to acquire, upgrade, or maintain long-term assets, such as property, plant, and equipment. Brokerage fees do not fall under this classification.
In summary, brokerage fees charged by a stockbroker are considered transaction costs as they are directly associated with executing investment transactions.