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I read that Dunkin’ Donuts is planning a $400 million initial public offering (IPO). With close to 10,000 locations worldwide, shouldn’t the company be worth more than that? Starbucks has a market cap of more than $25 billion. — M. R., Denver
When a company first issues shares to the public, it often sells off just a portion of itself, in order to raise money. If Dunkin’ Donuts were selling all of itself, that would indeed reflect a total value of $400 million. But if it’s selling just 10 percent, then the implied value is $4 billion. Once the shares debut and are trading in the market, their price will reflect how investors are valuing the company. Which brokerages charge very low commissions to buy or sell stock?
Which brokerages charge very low commissions to buy or sell stock? — N. C., Watertown, Wis.
Trading commissions are as low as $8 to $10 per trade at E*TRADE, Fidelity, Charles Schwab and TD Ameritrade. It’s $7 at Scottrade and Firstrade, and you can find even lower rates elsewhere. Look at more than commissions, though. After all, if you buy or sell stocks only a few times a year, finding the lowest commission rate won’t save you all that much and other brokerage features might be more valuable to you. Meanwhile, some brokerages have been charging quarterly account fees just for having an account with them. These are often waived if your account is large enough. When shopping for a brokerage, look at all the fees it charges and consider its conveniences (such as local branches, a wide variety of mutual funds or check-writing services) and how well it meets your needs. For comparison data on brokerages, visit www.broker.Fool.com, or look up SmartMoney magazine’s annual brokerage review. ¦
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