74. How much may be paid for 6% bonds maturing in 20 years to produce an income of 5% ?

75. What may be paid for 5% bonds maturing in 20 years to produce an income of 6% ?

76. How much may be paid for 7% bonds maturing in 30 years to produce an income of 5% ?

77. On June 1, I bought 500 Balt. & Ohio pf. stock at 70 (b 30), and paid for the same on June 25. How much did the stock cost, interest included? How much did I gain, if I sold the stock at 75 on June 25?

78. Which is the better investment, 6% bonds bought at 118, or 5% bonds bought at 90?

79. If stock bought at 10% premium will pay 5% on the investment, what per cent. will it pay if bought at 10% discount?

80. A dealer in stocks bought Chic. & Nor. pf. at 197. If it paid a dividend of 12%, what was the rate of income to the investor?

81. When U. S. 4's are quoted at 104, what sum must be invested to yield an income of $1000 a year?

82. Mr. G. owns 500 shares of Cumulative stock of a certain corporation. He received in one payment $1500 as past dues and a dividend of 5%. How much did Mr. G. receive?

83. A company paid 44% on Hypothecated bonds amounting to $897400. What was the sum paid?

84. Mr. R. has $6000 invested in 7% first mortgage bonds. also owns 75 shares ($50) of a certain mining stock which pays him 5% semi-annually. How much is Mr. R.'s income from these two investments?

85. Mr. S. has an annual income of $975 from an investment of $15000 in Consolidated bonds. What rate per cent. does he receive?

86. What is the annual income from $12000 invested in bonds bearing 14% interest quarterly?

87. What would be the cost of 400 Mil. L. S. & W. 6's at 128, brokerage %?

88. When Mor. & Es. cons. gtd. 7's are quoted at 130, what rate per cent. does the stock pay on the actual investment, if the brokerage is %?

89. If 4% bonds ($100) should sell at 61 what rate per cent. would they pay on the investment, brokerage %?

677. Buying and selling on margin.

1. On Mar. 1, 1900, I. M. Flush instructed his broker to buy for him 100 shares of Man. El. stock and deposited with the broker $1000 margin. On Mar. 10, the stock was purchased at 90. On Mar. 22, he sold the stock at 88. What was the balance due Mr. Flush on Mar. 31, and what was his loss?

EXPLANATION.-The form here given shows a customer's account as commonly kept by a broker. The brokerage is added to the purchase and deducted from the sale, and interest is calculated on the balances. There is a credit balance of $1000 from Mar. 1 to Mar. 10, on which the interest is $1.50; a debit balance of $8012.50 from Mar. 10 to Mar. 22, on which the interest is $16.03; and a credit balance of $775 from Mar. 22 to Mar. 31, on which the interest is $1.16.

On closing the account, it is found that there is a balance of $761.63 due Mr. Flush. Since he had deposited $1000, and has a credit balance of only $761.63, his loss is the difference, or $238.37.

EXAMPLES.

2. Mr. L. K. Wise directed his broker to purchase 200 Del. & Hudson stock, and deposited $2000 margin, Jan. 1, 1900. On Jan. 7, the stock was purchased at 108, and sold Jan. 25, at 110. How much did Mr. Wise gain, and what was the balance due him by the broker on Feb. 1?

3. On Apr. 2, 1900, I deposited with my broker $2500 margin for purchasing on the same day 250 Balt. & Ohio stock at 73§. He sold the stock Apr. 20, at 764, and remitted the balance due me. How much did he remit, and what was my net profit?

4. Mr. Greene deposited $5000 margin with his broker to purchase 500 Peo. Gas & C. stock. The margin was deposited on May 25, and the stock was purchased on June 6, at 984. On June 15, the stock was sold at 101. Find the balance due Mr. Greene on July 1, and his gain.

5. On Sept. 1, 1900, I. L. Risk deposited with his broker $5000 margin and instructed him to buy 500 shares of a certain stock at once. The stock was bought on the same day at 95. Instead of raising, as was expected, the stock immediately began to depreciate. On Sept. 25, Mr. Risk was forced by circumstances to instruct his broker to sell all the stock at the quotations for the day, which was 853. What was Mr. Risk's loss?

678. Buying and selling short.

1. Wm. H. Snoke sold "short" July 18, 1900, through his broker 200 shares Fed. Steel pf. stock at 66, and "covered" the sale July 30, at 62. Mr. Snoke placed $2000 as margin with the broker on July 18. What was his net profit?

The manner and form of keeping the customer's account in buying and selling "short" differs little from the method when buying and selling on margin. A margin is usually deposited on which interest is allowed. On "short" sales the stock is often borrowed for delivery and replaced when purchase is made. No interest is charged for this accommodation.

EXAMPLES.

2. On Oct. 1, 1900, E. O. Wells deposited $1000 margin with his broker and sold through him 100 shares Den. & R. G. pf. stock at 664, "short." On Oct. 15, the "short" was "covered" What was the profit, the stock having been borrowed for

at 63. delivery? 3. Nov. 8, 1900, I deposited $3000 margin and sold "short" through my broker 300 shares M. & St. L. pf. at 92, and Nov. 26 "covered" my "short" by buying at 90. Allowing 6% interest, what was the balance due me, and what was my net profit?

EXCHANGE.

679. Exchange is the system of making payments between persons in distant places by means of Drafts or Bills of Exchange.

680. A Draft, or Bill of Exchange, is a written order drawn by one person (the drawer) upon another person (the drawee) directing him to pay a specified sum of money to the order of the drawer or to a third person (the payee).

A draft, or bill of exchange, is frequently called an "exchange."

681. Domestic, or Inland, Exchange is the exchange between places in the same state or country.

682. Foreign Exchange is the exchange between places in different states or countries.

683. The Balance of Trade between two places is the difference in the value of their commercial transactions. This difference consists in the net amount due from one to the other.

Thus, if the purchases made by London of New York amount to $30,000,000 and the purchases made by New York of London amount to $28,000,000, the balance of trade is $2,000,000 in favor of New York, or against London.

684. Exchange is at par when a draft or bill sells for its face. It is above par, or at a premium, when it sells for more than its face; and below par, or at a discount, when it sells for less than its face.

1. The rate of exchange between two places depends upon the course of trade. If the trade between New York and Chicago is equal, exchange is at par. If New York owes Chicago more than Chicago owes New York, the drafts are at a premium in New York; for the demand in New York for drafts on Chicago is greater than the demand in Chicago for drafts on New York.

2. The reason why the banks in New York, in the above case, would charge a premium is because they must be at the expense of sending money to the Chicago banks, or be charged with interest on their unpaid balance. On the other hand, the Chicago banks would sell at a discount in order to get the money owed them in New York immediately.

3. The rate of exchange is limited by the cost of shipping gold or currency by express. The premium or discount will not exceed this cost; otherwise the money would be sent by express.

4. A time draft, or bill of exchange, is also subject to a bank discount on its face value for the time it has to run before becoming due.

DOMESTIC EXCHANGE.

685. Domestic Exchange is the exchange between two places in the same state or country.

686. A Bank Draft is a written order drawn by one bank upon another bank directing it to pay a specified sum of money to a third party or to his order.

EXPLANATION.-Suppose Wm. J. Milne of New York wishes to remit $365 to A. B. Cook in Chicago, he buys of a New York Bank a draft on a Chicago bank, having the draft made payable to the order of himself (as above). He then indorses it in full, "Pay A. B. Cook or order. Wm. J. Milne," encloses the draft in a letter, and mails it to A. B. Cook. When Mr. Cook desires the draft cashed, he goes to the bank with which he does business, or to any other bank, indorses the draft in blank, presents it for payment, and receives the money.

Mr. Milne could have had the draft written "Pay to the order of A. B. Cook" instead of to himself when he would have mailed it without any indorsement; but the former method is preferred because Mr. Milne's name appears upon the draft and the paper itself is evidence of payment by him to Mr. Cook. In cases of litigation, the draft can be obtained from the bank which issued it, as a bank's own cancelled drafts are always returned.

687. Bank drafts are the principal means by which remittances are made from one part of the country to another. Nearly all brokers keep money deposited with some one bank, called a correspondent, at one or more of the great money centers, such as New York, Chicago, Boston, St. Louis, Philadelphia, New Orleans, and San Francisco. Upon these correspondents banks draw drafts to sell to their customers for remittances to creditors. The banks make a profit on the drafts by charging "exchange," " premium," or "brokerage."

The drafts are drawn on the correspondent nearest to the creditors, and are received either at the bank drawn on or at any other bank tributary to the money center at their face value.