PRINCIPLES OF MANAGERIAL FINANCE (SUBSCR
15th Edition
ISBN: 9780137695621
Author: SMART
Publisher: PEARSON C
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Textbook Question
Chapter 2, Problem 2.1STP
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.
- a. What is the current bid/ask spread for Microsoft?
- b. 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.)
- c. What are your total transaction costs if the Nasdaq dealer who receives your order decides to act as broker and allows a public order to buy 1,500 shares of Microsoft to satisfy your order?
- d. Regardless of how your trade is executed, based on the bid/ask spread what is the market value of your trade?
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Chapter 2 Solutions
PRINCIPLES OF MANAGERIAL FINANCE (SUBSCR
Ch. 2.1 - What are financial institutions? Describe the role...Ch. 2.1 - Prob. 2.2RQCh. 2.1 - Describe the role of commercial banks, investment...Ch. 2.2 - What role do financial markets play in our...Ch. 2.2 - Prob. 2.5RQCh. 2.2 - Prob. 2.6RQCh. 2.2 - Prob. 2.7RQCh. 2.2 - Describe the role of capital markets from the...Ch. 2.3 - Prob. 2.9RQCh. 2.3 - Prob. 2.10RQ
Ch. 2.4 - What is the difference between an angel investor...Ch. 2.4 - Prob. 2.12RQCh. 2.4 - Prob. 2.13RQCh. 2.4 - Prob. 2.14RQCh. 2.5 - Prob. 2.15RQCh. 2.5 - What is a mortgage-backed security? What basic...Ch. 2.5 - Prob. 2.17RQCh. 2.5 - Why do falling home prices create an incentive for...Ch. 2.5 - Why does a crisis in the financial sector spill...Ch. 2 - In the chapter opener, you read about the...Ch. 2 - Transaction costs Assume that you use a TD...Ch. 2 - Prob. 2.1WUECh. 2 - Prob. 2.2WUECh. 2 - Prob. 2.3WUECh. 2 - Prob. 2.4WUECh. 2 - Prob. 2.5WUECh. 2 - Your broker calls to offer you the investment...Ch. 2 - Transaction costs You would like to purchase one...Ch. 2 - Transaction costs In late December you decide, for...Ch. 2 - Initial public offering On April 13, 2017, Yext...Ch. 2 - Initial public offering A Brazilian company called...Ch. 2 - Prob. 2.5PCh. 2 - Prob. 1SECh. 2 - Integrative Case 1 Merit Enterprise Corp. Sara...
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