Th ere are several factors that should be considered when you are choosing which brokerage fi rm(s)
to use to execute your trades. Th ere are also a wide range of services that claim to objectively recommend
brokerage fi rms. Many are actually sponsored by the brokerage fi rms themselves.
Go to the website www.consumersearch.com/online-brokers/reviews and read the information
provided under “Our Sources.” Th en follow the link for the Barron’s ratings. Here
you can read the Barron’s annual broker survey and download the “How the Brokers Stack
Up” report, which contains a list of fees. Suppose that you have $3,000 to invest and want to
put it in a non-IRA account.
1. Are all of the brokerage firms suitable if you want to open a cash account? Are they all
suitable if you want a margin account?
2. Choose two of the firms listed. Assume that you want to buy 200 shares of LLY stock
using a market order. If the order is filled at $42 per share, how much will the commission
be for the two firms if you place an online order?
3. Are there any maintenance fees associated with the account at either brokerage firm?
4. Now assume that you have a margin account and the balance is $3,000. Calculate the
interest rate you would pay if you borrowed money to buy stock.
