Computing the Commission On a Penny Stock Transaction

Scottrade.com is a website that executes stock transactions at a flat rate of $7 per transaction; however, the commission (i.e. transaction fee) is higher when trading a penny stock. The following was copied from the Scottrade.com trading webpage.

   If the price is under $1 at the time of execution, 
   commission is $7 + 1/2% of the principal.

Note: A penny stock is priced under a dollar.

Exercises
  1. No or Yes: 1/2% means one divided-by 2%.

  2. Edith Foogooman wants to buy 500 shares of IPT (iParty Corp.) at $0.44 per share. Edith will pay a commission of $_______. [round to nearest cent]

  3. The commission on a penny stock trade is $7 plus one-half percent of the principal amount. Write a symbolic rule that expresses this cost function.


Creator: Gerald Thurman [gthurman@gmail.com]
Created: 04 April 2005

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This work is licensed under a Creative Commons License.
BAB History

This BAB was created during the Spring 2005 session. The BAB was modified during the Fall 2007 session to use growth and decay factors.