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Stock Purchases & Commission
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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.
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Finding Stock Prices By researching online, you can find the current selling price of a stock. For example, at you can search for a company such as Hershey Co. (HSY) and look at how much the stock costs at the moment.
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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: · 100 = $3,991.00, but don’t forget about the commission!
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Commission Once you have determined the cost of the stocks you have to figure out the 2% commission that is charged. $ · .02 = $79.82 To find the total cost you add together the stock cost to the commission. $ $79.82 = $
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Example: You want to buy 500 shares of Ford, at the current trading price of $12.41 per share. Cost of the Stocks: 500 · = $6,205.00 Commission: .02 · 6, = $124.10 Total Price: 6, = $6,329.10
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Example: You want to buy 100 shares of Berkshire Hathaway at the current trading price of $100, per share! Cost of the Stocks: 100 · 100, = $10,040,000.00 Commission: .02 · 10,040,000 = $200,800.00 Total Price: 10,040, ,800 = $10,240,800.00
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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.
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