Stock is at par when it can be sold for its original or face value, or 100%; it is above par, or at a premium, when it will bring more than its face value; and it is below par, or at a discount, when it sells for less than its face value. Thus, when stock is at par, it is quoted at 100; when it is 5% above par, at 105; and when it is 5% below par, at 95.

629. Premium, Discount, and Brokerage are each a percentage computed upon the par value of the stock as the base.

630. A Stock Broker is a person who buys and sells stocks, either for himself, or as the agent of another.

631. Stock-jobbing is the buying and selling of stocks with the view to realize gain from their rise and fall in the market.

632. An Installment is a portion of the capital stock required of the stockholders as a payment on their subscription.

633. An Assessment is a sum required of stockholders, to meet the losses or to pay the business expenses of the company.

634. A Dividend is a sum paid to the stockholders from the profits of the business.

Dividends and assessments are a percentage computed upon the par value of the stock as the base.

635. Net Earnings are the moneys left after paying expenses, losses, and the interest upon the bonds, if there are any.

636. A Bond is a written instrument securing the payment of a sum of money at or before a specified time.

The principal bonds dealt in by brokers are Government, State, City, and Railroad bonds.

637. U. S. Bonds are of two kinds; viz., those which are payable at a fixed date, and those which, while payable at a fixed date, may be paid at an earlier specified time, as the Government may elect.

1. The former are quoted in commercial transactions by the rate of interest which they bear; thus, United States bonds bearing 6% interest are quoted U. S. 6's. The latter are quoted in commercial transactions by a combination of the two dates; thus, U. S. 5-20's, or U. S. 6's 5-20, means bonds of U. S. bearing 6% interest, and payable in 5 or 20 years, as the Government may choose.

2. When it is necessary to distinguish different issues bearing the same rate of interest, the year at which they become due is also mentioned; thus, U. S. 5's of '71; U. S. 5's of '74; U. S. 6's, 5-20, of '84; U. S. 6's, 5-20, of '85.

3. The 5-20's were issued in 1862, '64, '65, '67, and '70. They bear interest at 6%, paid semi-annually in gold, except the issue of 1870, called 5's of '81, which bear int. at 5%, paid quarterly in gold.

4. Bonds issued by States, cities, etc., are quoted in a similar manner. Thus, S. C. 6's are bonds bearing 6% interest, issued by the State of South Carolina.

638. A Coupon is a certificate of interest attached to a bond, to be cut off and presented for payment when the interest is due.

639. Currency is a term used to denote the circulating medium employed as a substitute for gold and silver. It consists, at present, in the United States, of U. S. Legal-tender Notes, or "Greenbacks," and the Bills issued by the Nat. Banks, and secured by U. S. Bonds.

If from any cause the paper medium depreciates in value, gold becomes an object of investment, the same as stocks. Gold being of fixed standard value, its fluctuations in price indicate changes in the value of the currency. Hence, when gold is said to be at a premium, currency is virtually below par, or at a discount.

640. 1. Find the cost of 100 shares of Chicago and Rock Island Railroad stock at 90; brokerage 1%.

ANALYSIS. Since the cost of one share is 90% of $100, or $90, the cost of 100 shares is 100 times $90, or $9000, to which add the brokerage, % of $10000, or $121, and the sum $90121, is the entire cost of the stock.

2. What cost 50 shares of N. Y. Central R. R. Stock, at par; brokerage, 1%?

3. Find the cost of 10 shares of Bank Stock at 104; brokerage 1%.

4. What is the cost of $2000 U. S. 6's 5-20, at 112; brokerage 1%?

641. 1. A broker has $5010 to invest in bank stock at 25% premium; how many shares can he buy, charging 1% for brokerage?

ANALYSIS.-Since the stock sells at 25% premium, each share with brokerage will cost $125; hence he can buy as many shares as $125 are contained times in $5010, or 40 shares.

2. A speculator invested $52000 in Ohio and Mississippi R. R. stock at 252, allowing 1% brokerage; how many shares did he buy?

3. If I invest $2350 in U. S. 6's, '81, at 1173, brokerage %, how many $1000 bonds do I receive?

642. 1. A man bought a number of shares of mining stock at 60, and sold the same at 68, and gained $800 by the transaction. How many shares did he buy?

ANALYSIS. Since he bought at 60% and sold at 68%, he gained 8% of the par value; hence $800 is 8% of $10000, the par value, and the number of shares at $100 each is 100.

2. Bought R. R. stock at 90, and sold at par, gaining $1000. Required the number of shares.

3. I purchased stock at 110 and sold at 98, losing $1200. How many shares did I buy?

4. A broker bought some stock at par, and sold it at 95, losing $2000. How many shares did he buy?

643. 1. What sum must be invested in California 7's, at 110, to obtain therefrom an annual income of $1400 ? ANALYSIS. Since the annual income is $7 on each share, the number of shares must be equal to $1400 ÷ $7, or 200 shares; and 200 shares at $110 amount to $22000, the required investment.

2. What sum must I invest in stock at 115, paying 10% yearly dividends, to realize an income of $2000 ?

3. What sum must be invested in N. Y. 7's at 103, in order to receive therefrom an annual income of $2100?

644. 1. What per cent. of his money will a person obtain by investing in 8% stock at 120?

ANALYSIS. Since each share costs $120, and pays $8 income, the per cent. will be 190, or 1 of 100%, equal to 6%.

2. What per cent. does stock yield when bought at 90, paying 6% dividends? When bought at 75? At 120?

3. What per cent. of interest does stock yield, which pays 5% semi-annual dividends, if bought at 150? At 140? At 120 ?

645. 1. What should be paid for stock yielding 6% dividends, in order to realize an annual interest on the investment of 8% ?

ANALYSIS. Since the annual dividend on each share is $6, this must be 8% of the sum required; and if 8% is $6, 1% is $1, and 100% is $75. Hence the stock must be bought for 75.

2. For what must stock that pays 7% dividends be bought to realize 10% interest? 9%? 8%?

3. For what should Missouri 6's be bought to pay 5% interest? 51%? 61%? 8%?

646. 1. How much currency can be bought for $500 in gold, when the latter is at a premium of 10%?

ANALYSIS.-Since $1 in gold is worth $1.10 in currency, $500 in gold is worth 500 times $1.10, or $550. Hence, etc.

2. How much currency can be bought for $200 in gold, when the latter is at a premium of 9%?

3. What is $1000 in gold worth in currency, when the former is at a premium of 12%? Of 91%? Of 101%?

647. 1. How much gold can be bought for $440 in currency, when the former is at a premium of 10%?

ANALYSIS. Since $1 in gold is worth $1.10 in currency, $440 will buy as many dollars in gold as $1.10 is contained times in $440, or $400 in gold. Hence, etc.

2. How much gold selling at 9% premium will $1090 in currency buy? $218? $654 ?

3. How much gold at 11% premium will $444 buy?

WRITTEN

648. Find the cost

EXERCISES.

1. Of 220 shares of bank stock, the market value of which is 103, brokerage 1%.

OPERATION.-(1034% +1%) of $100

$104, cost of 1 share.

$104 × 220 = $22880, cost of 220 shares. (640.)

FORMULA. Entire Cost (Market Value of 1 Share

+ Brokerage) × No. of Shares.

2. Find the cost of 350 shares of Western Union Tele

graph stock, market value 974, brokerage 1%.