RELATED PROBLEMS

416. 1. A town levied a tax of 3% on real estate assessed at $750,000 and on personal property assessed at $300,000. How much net revenue did the levy bring, if the cost of collection was 5%?

2. A town has an assessed valuation of $1,250,000. What must be the tax on each hundred dollars to raise $5625 for the support of its high school?

3. On January 1, the cash on hand in a city treasury amounted to $125,222.59, and the collections since that time have amounted to $133,838.56. The warrants paid to date amount to $211,624.76. What cash balance remains? How much interest would it earn if left in bank for 10 days at 2% per annum?

4. In the same city the following amounts were collected in October, 1906, from the sources indicated: Markets, $516.65; scales, $45.05; Assembly Hall, $40; licenses, $640.83; pound fines, $43.95; police fines, $518.79; levy of 1905, $2219.01; sewer assessment, $19.90; sidewalk assessment, $23.79; miscellaneous, $389.08. What were the month's collections? If the cost of making these collections averaged 21%, what was the total net amount received by the city during the month?

5. The amount appropriated in this city at the beginning of the fiscal year for current expenses and improvements was $247,134.88. Of this amount 75% has been expended. What is the balance of the appropriation yet unexpended?

6. If this city's total levy was $270,000, and the rate of taxation was 12 mills on the dollar, what was the assessed value of the real and personal property of the city?

STOCKS AND BONDS

417. When a number of persons engage in business together, they usually form themselves into an association called a Corporation. Corporations operate under charters issued in accordance with the laws of the states in which they are organized.

418. The sum of money contributed by the members to inaugurate and carry on the business is called the Capital Stock. The capital stock is divided into shares of a specified value (usually $100 each), and is issued in the form of certificates of stock stating how many shares the person named therein owns, and the face value of the same. The owners of certificates of stock are called stockholders.

419. If the corporation earns more than its expenses, part or all of the excess is divided among the stockholders as Dividends. The dividends are expressed as a certain per cent of the capital stock, or sometimes as a certain number of dollars a share. If a company declares a dividend of 10%, the owner of a $100 share will get $10.

420. The price at which a stock sells in the market is called its Market Value.

When a stock sells for more than its face value, it is said to be above par; when it sells for less than its face value, it is said to be below par; when it sells at its face value, it is said to be at par.

Thus, if a $100 share of stock sells for $105, the stock is 5% above par; if it sells for $97, the stock is 3% below par.

421. A written obligation under seal securing the payment of a sum of money at a specified time is called a Bond.

Bonds are issued by corporations for the purpose of: effecting loans. They are also issued by local, state, and national governments for the same purpose.

422. Bonds bear interest on their face value at a fixed rate; hence their market price does not affect the interest they yield. The income from stocks is variable, as it depends upon the prosperity of the business.

423. Persons who buy and sell stocks and bonds for others are called brokers, and their commission is called brokerage.

The brokerage is usually% of the par value, and is charged for buying and for selling.

424. The market values of stocks as given in the daily newspapers are called stock quotations.

For example, a quotation of 115 means that a $100 share or bond is selling for $115. In this case the seller receives $115 - $, or $1147 for each share; and the buyer pays $115 +}, or $115} for each share.

425. The following are the stock quotations in a newspaper of recent date:

The following are bond quotations on the same date:

Unless otherwise noted, the par value of stocks in the following prob lems is $100 per share, and brokerage is reckoned at }%.

WRITTEN EXERCISES

426. 1. What is the cost of 50 shares of stock quoted at 103ğ, brokerage %?

1 share costs $1033 +$1, or $103.

50 shares cost 50 x $1031, or $5175.

2. A man buys 40 shares of Western Union at 92, and sells it at 951. What is his gain?

40 × $921 = $3685, cost.

40 x $95 $3805, net selling price.

$3805 $3685 = $120, gain.

3. How much must be paid for 120 shares of Tennessee Coal & Iron stock at 118, brokerage %?

4. What will 60 shares of American Sugar stock cost at 1411?

5. A man bought 80 shares of Baltimore & Ohio stock at 80 and sold it at the quotation given on page 308. What did he gain?

6. Find the cost of 20 shares of Chesapeake & Ohio, 60 shares of Seaboard, 40 shares of Norfolk & Western, and 30 shares of Southern Railway at prices quoted.

7. How many shares of railroad stock at 160 can be bought for $38,550 ?

1 share cost $160 + $} = $1603.

.. the number of shares = $38,550

$160%=240.

8. How many shares of Atlantic Coast Line stock can be bought for $6445 at 161?

9. When Northern Pacific is quoted at 1983, how many shares can be bought for $31,820?

10. What is the income from 84 shares of bank stock that pays an 8% dividend?

The par value of 84 shares = $8400.
8% of $8400
= $672.

11. What income will a man receive from $3075 invested in railroad stock at 1023, if the stock pays a 4% dividend annually?

12. What annual income will a man receive if he invests $23,100 in bank stock which pays a 6% annual dividend, if he pays 110 for the stock? (No brokerage.)

13. If I invest $15,675 in United States 4% bonds at 104, what does the government pay me annually?

14. If I buy a 4% bond at 797, what is the rate of income on my investment, without considering the length of time the bonds run?

Each $80 invested yields $4.

.. the rate of income = 8%, or 5%.

15. What amount of 4% bonds must I buy in order that they may yield an income of $1200 a year?

16. What will the bonds required in problem 15 cost if bought at 79g?

17. A southern "industrial" stock pays $15 a share each year in dividends. What price must be paid for one share in order to yield 6% on the investment? (No brokerage.)

18. A bank with a capital stock of $150,000 has an expense account of $8000. Its gross earnings are $20,000 What per cent dividend can it pay?

a year.

19. A railroad company has a capital stock of $1,000,000, and a bonded indebtedness of $3,000,000. What must be its net earnings to enable it to pay a 4% dividend on its capital stock and 6% interest on its bonds after setting aside $10,000 as a surplus fund?