STOCKS AND BONDS.

669. A corporation is a body created and authorized by law to transact a given business.

669. Stock is the capital invested in the business of a corporation.

670. A share is one of the equal parts into which the capital is divided.

Capital is generally divided into $100 shares; sometimes into $500, $50, or $25 shares. Unless otherwise specified, $100 shares are

intended.

671. A certificate of stock is a corporation's paper acknowledging its indebtedness for a number of shares.

672. The par value of stock is the face value of one of its shares.

673. The market value of stock is the value at which a share is bought or sold in open market.

A stock is said to be at par when its market value equals its face value, par being the Latin word for equal. The expression, at a premium, means above par, and at a discount, below par.

674. A dividend is a percentage divided among the stockholders, as earnings on the capital invested.

Gross earnings are gross receipts; net earnings are gross receipts less

expenses.

675. An assessment is a percentage required by the corporation from the stockholders to cover losses, etc.

NOTE.—Brokerage or commission, dividends, assessments, premiums, etc., are computed on the face or par value of stocks or bonds; and not on the buying or selling value.

676. A bond is a certificate of indebtedness issued by a corporation for money borrowed.

Bonds are of the denomination of $1,000, unless otherwise specified.

677. Bonds are generally named by naming the rate of interest together with the name of the nation, state, or corporation; thus, U. S. 4's; N. J. 6's; N. Y. and N. H. 5's.

678. In applying PERCENTAGE to Stocks and Bonds, the par value is the base; the premium, the discount, or the dividend, etc., is the percentage; the market price is the amount or the difference; and the rate per cent. of premium or discount is the rate per cent., as in percentage.

679. To find the cost of stocks or of bonds:

Multiply the market value including brokerage by the number of shares or of bonds.

NOTE. - Brokerage in stocks or bonds is computed on the face value.

In selling, the principal receives the market value minus the brokerage; in buying, the principal pays the market price plus the brokerage.

1.' How much did Mr. Brown pay for 24 shares of R. R. stock costing $144 each, brokerage %?

% on face value, $100, is $ .. 24 × $144} = ?

2. What is the cost of 560 shares of stock, at 283 % premium, brokerage %?

1

2131

3. Bought 212 shares of Telegraph stock at 8 % discount, % brokerage. What did the stock cost? 1

4. Mr. Rice engaged his broker to buy 56 shares of stock. If each share cost $75, and the brokerage was %, what was the entire cost to Mr. Rice?

5. If B sells 80 shares Ohio and Mississippi Railroad stock at 12 per cent. discount, brokerage per cent., what does he receive for the stock?

6. On selling 50 U. S. 4 % bonds at 1093, brokerage per cent., how much should the principal receive? }

7. Bank stock bought at 15 per cent. discount, was sold at 101. What was the gain, brokerage % each way?

How

8. A man bought 150 shares of Missouri Pacific at 115, and sold 50 shares at 128, and the remainder at 136. much was his gain, allowing for brokerage?

9. What profit is made by buying 95 shares of Rock Island R. R. stock at 112, and selling at 1361, brokerage § % ?

10. If a speculator bought 500 shares of Union Pacific R. R. stock at 75, and sold at 714, how much did he lose, paying % brokerage ?

11. How much is lost by selling 1,500 shares of stock at 873, if it cost 89, brokerage being 1% ?

680. To find the number of shares of stock or of bonds.

Divide the entire cost by the cost of one share including the brokerage.

1. If insurance stock is sold at 4% premium, how many shares can be bought for $4,170, brokerage being %?

2. At 3% discount, how many shares of R. R. stock can be purchased for $19,325, brokerage %?

3. How many shares at 1371⁄2 can be bought for $4,125 ? 4. If one share of bank stock costs 1023 and the brokerage is %, how many shares can be bought for $6,157.50?

5. How many shares of stock at a discount of 15 %, with % brokerage, can be bought for $3,830g?

6. A broker sent his principal $56,437.50 on selling stocks at 13% premium, and charging % commission. How many shares did he sell?

681. To find the amount of an investment having a given income.

Divide the entire income by the income from 1 share or bond, to find the number of shares, and multiply the result by the market value of one share.

1. If an income of $2,400 is derived from 4 % bonds, what is the amount invested, each bond being worth 1043 ?

2. How much must be invested in U. S. 3's at 1071⁄2 to afford a quarterly dividend of $750?

3. If stock, worth 109, yields 5 % semi-annually, how much must be invested to yield an annual income of $6,000, brokerage being %?

4. How much must be invested in stock sold at 4% discount and yielding 3% to afford an annual income of $1,200 ?

PROBLEM I.

682. To find a part of a number.

Dividend = Par Value × Rate.

NOTE. The market value equals the par value plus the premium or minus the discount.

1. What is the income from 250 shares of stock paying 5 % dividends?

The face value of 250 shares is $25,000; .05 of $25,000 is $1,250. 2. If Mr. Matthews owns 145 shares of a 4% stock, what is his income from the stock?

3. A man had $16,000 invested in manufacturing stock paying 6%. He sold his manufacturing stock for $16,000 and bought 12% bank stock at 1597, paying % brokerage. How much did he increase his annual income?

4. How much less than $1,000 per year is the dividend on two hundred and fifty 3% bonds?

5. What is the income from 1,000 U. S. 34's and 2,500 shares of bank stock paying 7 %?

PROBLEM II.

683. To find what part one number is of another.

Rate of Interest = Dividend Market Value.

1. What rate of interest does Mr. Bell's money earn, if it is invested in 8 % bank stock at 125 ?

If $125 earns $8, $1 earns 1-125th of $8, or .06%. Ans., 64 %.

2. At what rate is money invested, if it buys a 6% stock at 96 ?

3. A man bought R. R. stock at 753, brokerage %. What rate of interest does he receive, if the stock declares a 5% dividend?

4. If stock is bought at 116, brokerage, what is the rate of income, a dividend of 7% being declared?

5. R. R. stock bought at 12 % discount and 1% brokerage, declares 5% dividends. What is the rate of interest paid on the investment?

PROBLEM III.

684. To find a number, a part being given.

Market Value - Dividend ÷ Rate of Investment.

NOTE.-The market value equals the par value plus the premium, or minus the discount.

1. If a 5% stock is bought so as to pay 6% on the investment, what is the market value of the stock?

If $5, the dividend on 1 share, is 6% of the market value, 1 % is of $5, and 100% is 100 times as much. Divide by 6 and multiply by 100; or, divide by .06.

2. What is the market value of an 8% stock earning 12 % on the investment ?

3. How much above par is a 5 % stock that earns 4 % on the investment?

First find the market value.

4. How much below par is a 3% bond that earns 3% on the investment?

5. If a stock declares 8 % dividends, and pays 63% income, is it above or below par, and how much?

6. If a stock declares 7% dividends, and pays 8% income, is it above or below par, and how much?