Stock Purchases & Commission

Buying Stocks 1st: You need to know how much the stock costs. This price is constantly changing. 2nd: You need to determine how many shares of stock you want to purchase. 3rd: You need to realize that full service brokers usually charge a 2% commission on stock transactions.

Finding Stock Prices By researching online, you can find the current selling price of a stock. For example, at http://finance.yahoo.com you can search for a company such as Hershey Co. (HSY) and look at how much the stock costs at the moment.

Determining Stock Cost Lets assume you have decided to buy Hershey (HSY). The price is $39.91. You decide you want to purchase 100 shares of the company. To find out how much the stock will cost you simply multiply the price ($39.91) by the number of shares (100) and you get: 39.91 · 100 = $3,991.00, but don’t forget about the commission!

Commission Once you have determined the cost of the stocks you have to figure out the 2% commission that is charged. $3991.00 · .02 = $79.82 To find the total cost you add together the stock cost to the commission. $3991.00 + $79.82 = $4070.82

Example: You want to buy 500 shares of Ford, at the current trading price of $12.41 per share. Cost of the Stocks:  500 · 12.41 = $6,205.00 Commission:  .02 · 6,205.00 = $124.10 Total Price: 6,205.00 + 124.10 = $6,329.10

Example: You want to buy 100 shares of Berkshire Hathaway at the current trading price of $100,400.00 per share! Cost of the Stocks:  100 · 100,400.00 = $10,040,000.00 Commission:  .02 · 10,040,000 = $200,800.00 Total Price: 10,040,000 + 200,800 = $10,240,800.00

Extensions What would happen to the total cost of the transaction if the 2% commission: Went up? The total cost would be more. Went down? The total cost would be less. When investing your own money do you want high or low commissions? LOW – the transaction will cost less money.