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FORM OF A BANK CHECK.
Harrisburg, May 10, 1895.
Farmers' National Bank.
Genry Good, One Hundred $100.
278. Promissory Note.
A Promissory Note is a written promise to pay a specified person a specified sum at a specified time.
The following form is that of an individual note, payable after date:
FORM OF A PROMISSORY NOTE.
Pittsburg, Aug. 8, 1895.
Three months after date, I promise to way to the order of —John doble
156 Dollars, without defalcation, value received.
EXCHANGE. 279. Exchange is the method of making payments in distant places by means of Drafts or Bills of Exchange.
280. A Draft is a written order for the payment of money.
281. There are two kinds of exchange, Domestic and Foreign. Exchange between places in the same country is called Domestic Exchange; exchange between places in different countries is called Foreign Exchange.
In domestic exchange a bill is usually called a Draft; in foreign exchange a bill is called a Bill of Exchange.
282. A Sight Draft is one payable on presentation. In some States, however, three days of grace are allowed. Bankers' drafts omit the words “at sight,” and are payable on demand, without grace.
FORM OF A SIGHT DRAFT.
Philadelphia, Sept. 10, 1895.
Pay to the order of
Dollars, value received, and charge to the account of
R. G. Ely Co.,
& Suppose William P. Dixon of Philadelphia owes James King of Chicago $500. He procures from the banking-house of Geo. Reed & Co. the above draft, on the back of which he writes “Pay to the order of James King,” and signs his name. He then forwards the draft to James King, who presents it to R. C. Ely & Co., bankers, for payment.
283. A Time Draft is one payable at a specified time after sight or after the date of the draft.
FORM OF A TIME DRAFT.
New York, Sept. 12, 1895.
180 Dollars, value received, and charge to the account of To James H. Ceak,
284. Acceptance of a time draft is agreeing to pay it when due. This is done by the drawee writing “Accepted ” across the face, with the date and his name.
285. Exchange is said to be at a Premium or Above Par when a draft sells for more than its face value.
Exchange is said to be at a Discount or Below Par when a draft sells for less than its face value.
The rate of exchange between two places depends upon the relative conditions of trade at those places. If the trade between Boston and New Orleans is equal, the exchange is at par. If Boston owes New Orleans, the demand in Boston for drafts on New Orleans is greater than the supply, and they are therefore sold at a premium ; but if New Orleans owes Boston, the supply of drafts on New Orleans in Boston is greater than the demand, and drafts on New Orleans, therefore, are sold at a discount.
286. To find the cost of a draft.
WRITTEN EXERCISES. 1. Find the cost of a sight draft for $800 when exchange is 11% discount.
At a discount of 11% the cost of .015
Rate of exchange. $1 is $1 – 1) cents $.985. .985 Cost of $1.
The cost of $800 will be 800 times 800 $788.000, Ans.
$.985, which are $788. 2. Find the cost of a draft for $800, due 60 days after date, exchange being 11% premium. PROCESS.
The bank discount of $1 for 60 da. $1.00
The cost of $1 at par is $1 – $.01
= $.99. .015 Premium.
The cost of $1, with the premium, 1.005 Cost of $1.
is $.99 + $.015, or $1.005. 800
The cost of $800 will be 800 times $804.000, Ans.
$1.005, wbich are $804.00. 3. Find the cost of a sight draft for $2000, exchange being 11% premium.
4. Find the cost of a sight draft for $1600 when the exchange is 2% discount.
5. Find the cost of a draft for $5000, due 30 days after date, if exchange is 13% discount.
287. To find the face of a draft.
WRITTEN EXERCISES. 1. What is the face of a sight draft which can be bought for $3045 when exchange is at 11% premium?
If the premium is 11%, the cost of $1 will be $1.015.
If the cost of the draft is. $3015, its face will be as many dollars as $1.015 is contained times in $3045, which are $3000.
2. Find the face of a 60-day draft, with interest at 6%, which can be bought for $4030 when exchange is at a pre mium of 14%.
$1.0075)$4030($4000, Ans. .01 Dis. of $1.
Cost of $1 at par.
1.0075 Cost of $1.
If the cost of the draft is $4030, its face will be $4030 divided by $1.0075, which is $4000.
3. What is the face of a sight draft which can be bought for $484.80 when exchange is at 1% premium?
4. What is the face of a sight draft which can be bought for $5174.40 when exchange is at 2% discount?
5. What is the face of a draft, due 60 days after sight, with interest at 6%, which can be bought for $1173 when exchange is 14% discount?
6. What is the face of a draft, due 90 days after sight, with interest at 5%, which can be bought for $1809 when exchange is 13% premium?
7. I can purchase a 60-day draft on San Francisco for $7830 when exchange is 13% discount; what is the face?