III. COMMISSION AND BROKERAGE

302. An agent is a person authorized to transact business for another. He may be a commission merchant, broker, collector, factor, consignee, or correspondent.

The person for whom the business is transacted is called the principal.

303. The consignment is the goods shipped.

304. Commission is the compensation allowed the agent for his services, and is some per cent of the money expended or collected.

305. Brokerage is the commission allowed a broker for his services. Brokerage is usually a much smaller per cent than commission, for the broker does not handle the goods.

306. The sum left after the commission and all other expenses have been deducted, is called the net proceeds. 307. Fundamental principles of commission:

1. If an agent sells, his commission is some per cent of the sales.

2. If an agent buys, his commission is some per cent of the purchase.

EXAMPLES

1. Find the net proceeds, if an agent has sold $348 worth of cotton at a commission of 5%.

2. An agent received $2160; after deducting his commission of 8% for buying, he bought wheat with what remained. How many dollars were spent for wheat?

SOLUTION: 1. 108% of investment

=

=

$2160.

To of $2160 = $20.

1. Find the net proceeds from the sale of 36 barrels of flour at $4 a barrel, commission 61%.

2. My principal instructed me to invest $1244.40 in wool after deducting my commission of 2%. What was my commission?

3. An agent sells 1200 barrels of apples at $4.50 a barrel, and charges 21% commission. After deducting his commission of 8% for buying, he invests the net proceeds in cotton. What is his entire commission?

4. A lawyer charges $70 for collecting a debt of $1400. Find his per cent of commission.

5. An agent sold goods amounting to $4800, receiving 31% commission. After paying $25 charges, he invested the balance in cattle, charging 21% commission on the investment. How much was invested?

6. Having sold a consignment of wheat on 3% commission, I am requested to invest the proceeds in hogs after deducting my purchase commission of 2%. My entire commission is $265. What did the hogs cost?

7. A lawyer having a debt of $785 to collect, compromises for 82%. What is his commission at 10%?

8. An agent sold a farm. After taking out his commission of 10%, he sent his principal $450. What did the purchaser pay for the farm?

9. A broker received $169.20 for selling a farm for $8460. What per cent was his brokerage?

10. My agent sold my flour at 4% commission; increasing the proceeds by $4.20, I bought wheat, paying 2% commission; wheat declining 33%, my loss, including commissions, was $5: what was the flour worth?-R. N. H.,

IV. INSURANCE

308. Insurance is security guaranteed by one party to another against loss or damage. The two kinds of insurance are personal and property.

309. Personal insurance is a contract in which one party, in consideration of certain premiums received, agrees to pay a certain sum to the insured party or to his heirs or assigns, in the event of death, sickness, or serious accident. Personal insurance is either life insurance, health insurance, or accident insurance.

310. Property insurance is a guarantee of indemnity for loss sustained on account of any cause specified in the policy. The various kinds of property insurance are fire, marine, live stock, plate glass, etc.

311. The policy is the written contract between the insurer and the person insured.

312. The premium is the sum paid for insurance.

313. The risk is the total liability of the insurer in the event of total loss of property insured.

NOTE. To protect themselves against fraud, insurance companies usually take risks at not more than two-thirds of the real value of the property insured. When the insured property suffers damage less than the amount of the policy, the insurance company pays only the estimated loss.

314. Fundamental principles of insurance:

1. In life insurance, the premium is usually a certain sum per $1000, payable annually, semi-annually, or quarterly.

2. In property insurance, the premium, which is usually paid annually, is some fixed per cent of the risk.

EXAMPLES

1. A merchant insured his store for $7500 at 23%. What

2. If the premium is $57 and the policy is $2850, what is the rate?

Exercise XXXVII

1. A man pays $12 for insuring his house for $800. What is the rate?

2. What will be the premium for insuring property, at 23%, to cover $27370?

3. A shipment of cotton was insured at 43% for a sum equal to § of its value. The premium was $122.50. What was the cotton worth?

4. A man obtained a life policy of $5000 at the rate of $10.70 per $1000. Find his annual premium.

5. A vessel valued at $50400 was insured for 2 of its value at 11%. The first company re-insured of the risk in a second company, paying $441 premium. Find the first premium, and the second rate of insurance.

6. Find the amount of the premiums paid in 15 years on a life policy of $6000, at $27.50 per $1000 annually.

7. If a man who is insured for $6000, at an annual premium of $31.40 per $1000, dies after 12 payments, how much more will his heirs get than has been paid in premiums?

8. Find the amount of the policy which will cover the value of a ship load of cotton worth $24822, and the premium at the rate of 11%.

9. A man paid $42.30 for insuring of his house at %. What is the value of the house?

10. A man paid $21 to have his house insured for 3 of its value at 14%. What was the value of his house?