Learning Goal 3
ST2–1 Transaction costs Assume that you use a TD Ameritrade brokerage account and place your stock trades through the Interactive Voice Response (IVR) Phone System, which charges a $34.99 commission per stock trade. You would like to sell 1,500 shares of Microsoft Corporation, which is listed on the Nasdaq stock exchange, so you check the real-time quotes through TD Ameritrade and see a bid price of $57.31 and an ask price of $57.33.
What is the current bid/ask spread for Microsoft?
If you place the sell order and TD Ameritrade routes the order to Microsoft’s listing exchange, what are your likely total transaction costs? (Hint: Nasdaq is a dealer market.)
What are your total transaction ...