Calculate variable transaction costs $($market impact component$).$

Broker XYZ works with a market impact model that estimates the slippage cost S of each of n equal$-$sized executions c $=$ X$/$n with function S $=$ vcm$,$ where the coefficient v and exponent m are related to the liquidity of the security to be purchased or sold. In this case, the per$-$transaction cost B$/$n is estimated to have a fixed component F $($order processing costs$)$ and an increasing variable cost component vcm $=$ v$($X$/$n$)$m $($this is the market impact component of the execution costs$)$:

B$/$n $=$ F $+$ v$($X$/$n$)$m

Suppose that broker analysts have estimated F to be $$0\mathrm{.}03$ per order, based on knowledge of order processing costs, and v and m to be $0\mathrm{.}001$ and $1\mathrm{.}5.$ Calculate variable transaction costs $($market impact component$).$

Question $5$Answer

$$234\mathrm{.}89$

$$352\mathrm{.}34$

none of the listed

$$353\mathrm{.}98$