A customer purchases $20,000 par value of 13 year municipal bonds with a 6% coupon through your firm. What amount would be shown as the concession on the customer confirmation?

In this scenario, the concession represents the compensation the broker-dealer receives for executing the trade. The calculation of the concession depends on the spread between the price at which the firm acquires the bonds and the price at which they sell them to the customer.

For municipal bonds, a typical convention is that the concession can be a percentage of the par value, often referred to as a basis point figure. In this case, if the concession is $100 in aggregate, it suggests that the broker-dealer received this amount as compensation for executing the transaction. Given the par value of $20,000, a concession of $100 would be equivalent to 0.5% of the total amount, which is a reasonable amount for typical bond transactions.

Understanding concessions is essential in the context of broker-dealer operations, as it demonstrates how they earn revenue from facilitating trades. The figure shown would be specifically noted in the customer confirmation as a transparency measure, indicating to the customer the costs associated with the trade. The other options propose different figures that either imply a different pricing structure or do not align with standard practices for concessions on municipal bonds.