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only $99.64; .. the lender will gain 36 cents by waiting a year and then receiving $100 instead of taking $94 to day.

Let the following examples be solved by both methods.

11. What is the discount by rule, and what by custom, on $1000, payable in 1 year?

Ans. By rule, $56.60; by custom, $60. 12. What is the difference in discount by the two methods on $6500 for 8m.? Ans. $10. 13. What is the discount on $256, due in 2yr. 3m., at 8 per cent.? Ans. $39.05, or $46.08. NOTE 3. Business men often deduct more than the legal rate of interest for present payment of a bill having a term of credit.

14. Jan. 1, 1862, bought goods worth $75 on a credit of 6 months; what shall I pay for the same to-day, if the merchant will deduct 5 per cent. for cash? Ans. $71.25.

15. What shall I pay on a bill of $250, if 8 per cent. is deducted for cash?

INSURANCE.

254. INSURANCE is security against loss of property by fire, shipwreck, or other specified casualty; or against loss of life or health by disease or accident.

255. The PREMIUM is the sum paid for the insurance, and is usually computed at a certain per cent. on the sum insured. The per cent. varies according to the nature, locality, etc., of the property, or the age, place of residence, etc., of the person insured; also according to the length of time for which the security is given.

NOTE. Some property is so hazardous, that insurance companies decline taking the risk at any per cent.

256. The POLICY is the writing or record of the contract, given by the insurer to the insured. The policy specifies the nature of the risk, and names the hour when it begins and ends.

254. What is Insurance? 255. Premium? How computed? Does the per cent. vary? Why? 256. What is the Policy? What does it specify?

257. If property is fully insured the owner is tempted to destroy the property, and secure its value from the insurance company. To prevent such fraud, companies will usually insure the property for only about or its value, requiring the owner to risk the remainder. The same property may be insured at several different offices, by consent of the companies insuring it, but not so that the whole sum insured at the different offices shall exceed that per cent. of its value which a single company is accustomed to insure.

258. To calculate the premium on a given sum:

RULE. Multiply the sum insured by the rate per cent., written decimally.

NOTE. The insured usually pays a given sum, say, $1.25, for the policy, in addition to the premium of a certain per cent. on the sum insured.

Ex. 1. What is the cost of insuring $2500 on my house for 1 year at 2 per cent., the policy being $1.25?

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2. What is the annual premium for insuring a manufacturing establishment in the sum of $75000, at 3 per cent.?

Ans. $2250.

3. In a certain house, the furniture, worth $2400, is insured for its value at 13 per cent.; what is the premium?

4. The Merrimac Mutual Fire Insurance Company have insured $2000 on my house for a period of 5 years, at 3 of 1 per cent.; what is the cost, the policy being $1.25 ?

5. I buy a house for $8000, and get it insured for of its value at of 1 per cent.; the house being burned, what is my loss? What the loss of the insurers?

Ans. My loss, $2040; loss of Co., $5960.

257. Is property usually insured for its full value? Why not? May it be insured at more than one office? On what conditions? 258 Rule for computing premium? Cost of policy?

6. What is the premium, at 1 per cent., for insuring $75000 on a steamboat and cargo from Boston to Havre ?

7. A cotton factory worth $25000, and the machinery and stock worth $35000, are insured for their value at 3 per cent.; what is the premium?

per

8. What is the annual premium for insuring $6000 for 7 years on the life of a man 25 years of age, the rate being .97 of 1 cent. annually? Ans. $58.20. 9. What will be the annual premium for insuring $8500 for 10 years on the life of a man 30 years of age, the premium being 1.09 per cent.?

STOCKS.

259. The CAPITAL or STOCK of a Bank, Railroad, Insurance, Mining, or Manufacturing Company, or other Corporation, is the money or other property employed in transacting the business of the Company. City, State, and Government Bonds are also called Stocks.

260. The capital or stock of a company, is usually divided into a number of equal parts, called shares, and the owners of the shares are called stockholders.

261. Shares of stock are bought and sold like any other property. The nominal or par value of a share of stock is a fixed sum (in most companies $100, though in some companies more, and in some, less), but the market value varies, according to circumstances; as, e. g., if a company is prosperous, and its prospects are good, its stock rises in price; but if the company has been unfortunate, and its prospects are bad, its stock declines.

The abundance or scarcity of money also affects the price of stocks. The price of government stocks also depends upon the state of the country as to peace or war, the prospects of the stability or instability of the government, etc., etc.

NOTE. In this work, $100 is considered the par value of a share of stock, unless some other sum is named.

259. What is the Capital or Stock of a Company? 260. How divided? 261. What is the par value of stock? The market value, how does it vary?

262. If a share of stock sells for its nominal value, it is said to be at par; if it sells for more, it is at a premium, in advance, or above par; if it sells for less, it is at a discount, or below par.

263. The interest paid on government stocks, and the profits from the business of companies, distributed from time to time among the stockholders, are called Dividends.

The sums of money occasionally required of the stockholders, to meet the losses or expenses of the company, are called Assess

ments.

264. Assessments, dividends, discounts, and premiums are percentages on the par value of the stock as a base. Hence, PROBLEM 1. To find an assessment, a dividend, discount, or premium :

RULE. Multiply the par value of the stock by the rate per cent., written decimally.

Ex. 1. The directors of a manufacturing company, wishing to enlarge their works, call for an assessment of 5 per cent. on the capital of the company; what will be the assessment on $15000 worth of the stock?

OPERATION.

$15000
.05

$75 0.0 0, Ans.

The operation is the same as for computing interest for 1 year, at any given rate.

2. The Boston and Maine Railroad Company paid a dividend of 4 per cent., Jan. 1, 1861; what was paid on 25 shares of its stock?

OPERATION.

$100

25

First find the value of 25 shares, and then compute the dividend.

$2500
.0 4

$100.00, Ans.

262. When is stock at par? Above par? Below par? 263. What are dividends? Assessments? 264. Rule for computing dividends, assessments, etc.?

3. What is the discount on $1400 worth of stock which sells at 30 per cent. below par? Ans. $420.

4. Suppose the New England Glass Co. Stock sells at an advance of 10 per cent., what is the premium on 5 shares at $500 per share?

265. PROBLEM 2. To find the market value of stock when sold at a premium, or at a discount.

Ex. 1. What is the market value of $5000 worth of stock, at a discount of 5 per cent.?

$5000
.95

25000

45000

$475 0.0 0, Ans.

Since the stock sells at a discount of 5 per cent., $1 of the stock sells for 95 cents, i. e. the market value is .95 of the par value.

2. What is the market value of 6 shares of Fitchburg Railroad Stock, at an advance of 2 per cent.?

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Similar reasoning holds in all cases. Hence the

RULE. Multiply the par value of the stock by the number which represents the market value of $1 of the stock.

3. What shall I receive for 12 shares of the Andover Bank Stock at 9 per cent. premium? Ans. $1308.

4. What is the market value of 75 shares of Railroad Stock at a discount of 85 per cent.?

5. What is the premium on 15 Shares of the Western Railroad Stock, at 18 per cent. advance?

265. Rule for finding the market value of stocks?

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