STOCKS AND CORPORATIONS.

216. Stock is a general name for the money contributed by individuals for the establishment of banks and manufacturing companies, and the individuals who contribute the money are called Stockholders.

217. The individuals so associated are called, in their collective capacity, a Corporation; and the law which defines their rights and powers, is called the Charter of the Bank or Company.

218. The amount of money paid in by the stockholders to carry on the business of the corporation, is called the Capital. The capital is generally divided into a certain number of equal parts called shares, and the written evidences of ownership of such shares, are called certificates of stock.

219. When the General Government or any of the states borrows money for public purposes, an evidence is given to the lender in the form of a bond, bearing a given interest. Such bonds, when given by the United States, are called United States Stock; and when given by any one of the states, are called State Stocks.

220. The nominal or par value of a stock is its original cost; that is, the amount named in the certificate or bond. The market value is what it will bring when sold. If the market value is above the par value, the stock is said to be at a premium, or above par; but if the market value is below the par value, it is then said to be at a discount, or below par.

216. What is stock? What are individuals called who own the stock?

217. What are they called in their associated capacity? What is the law which incorporates them?

218. What is the amount of money paid in by the stockholders called? How is the capital generally divided? What is the evidence of ownership called?

219. What is United States stock? What are state stocks?

220. What is the nominal or par value of a stock? What is the market value? What do you understand by a stock's being at a premium? What by its being at a discount?

COMMISSION AND BROKERAGE.

221. A person who buys or sells goods for another, receiving therefor a certain rate per cent, is called a factor or commission merchant; and the percentage on any purchase or sale, is called the commission.

222. Dealers in money or stocks are called Brokers, and the amount of their commissions on any purchase or sale, is called the brokerage. The commission for goods or moneys is generally a certain per cent or rate per hundred on the moneys paid out or received, and the amount may be determined by the rules of simple in

terest.

The commission for the purchase and sale of goods varies from 2 to 12 per cent, and under some circumstances even higher rates are paid. The brokerage on the purchase and sale of stocks in Wall-street, in the city of New York, is generally one-fourth per cent on the par value of the stock.

EXAMPLES.

1. What is the commission on $4396 at 6 per cent?

2. A factor sells 60 bales of cotton at $425 per bale, and is to receive 2 per cent commission: how much must he pay over to his principal ? Ans. $24862,50.

221. What is the business of a commission merchant?

222. What is the business of a broker? How is the commission on goods and moneys generally estimated? What is the general commission on the purchase and sale of goods? How may it be determined? What is the customary brokerage on the purchase and sale of stocks?

3. A sent to B, a broker, $3825 to be invested in stock: B is to receive 2 per cent on the amount paid for the stock what was the value of the stock purchased?

Multiply the amount to be invested by 100 and divide the product by 100 plus the brokerage.

4. I have $5000 to be laid out in stocks which are 15 per cent below par: how much will it purchase at the par or nominal value?

It is plain that every 85 dollars will purchase stock of the par value of $100: hence,

$85 $100 :: $5000: Ans.

:

Therefore, to find how much will be purchased at the par value, when the stock is below par,

Multiply the sum to be invested by 100 and divide the product by 100 less the discount.

5. Messrs. P, W, and K buy 200 shares of United States stock for Mr. A. They pay $197 per share, and are to receive one-fourth per cent on the money they advance: how much must A pay them for the stock?

Ans. $39498,50.

6. A factor receives $708,75, and is directed to purchase iron at $45 per ton: he is to receive 5 per cent on the money paid: how much iron can he purchase? Ans. 15 tons.

7. Messrs. P, W, and K receive $28750 to be invested in stock. They charge 24 per cent commission on the amount paid what is the value of the stock purchased? Ans. $28048,78+. 8. The par value or first cost of 167 shares of bank stock was $200 per share: what is the present value, if the stock is at a premium of 25 per cent, that is, 25 per cent above Ans.

par

?

9. What would be the value of the stock named in the last example, if it were at a discount of 10 per cent? Ans. $30060. 10. One hundred shares of United States Bank stock are worth 181 per cent premium: the par value being $200 per share, what is the value of the stock?

Ans. $23700. 11. A bank fails, and has in circulation bills to the amount of $267581. It can pay 91 per cent; how much money is there on hand?

Ans.

12. Sixty-nine shares of bank stock, of which the par value is $125, is at a discount of 8 per cent: what is its value? Ans. $7935.

13. My commission merchant sells goods to the amount of $1000, on which I allow him a commission of 2 per cent, and as he pays over before the money becomes due, I allow him 1 per cent: how much am I to receive? Ans. $965,30. 14. My broker receives from me $2000 to be laid out in stocks: what will be the value of my stocks after allowing him 21 per cent commission? Ans.

15. I sold $6910,80 worth of goods for a merchant at a commission of 21 per cent: how much ought I to pay over to my principal ? Ans. $6738,03.

16. I remitted to my agent $7380 to lay out in the purchase of iron. He takes 3 per cent on the whole sum for his commission, and then buys iron at 95 dollars per ton: how much does he purchase? Ans.

LOSS AND GAIN,

223. Loss and Gain is a rule by which merchants discover the amount lost or gained in the purchase and sale of goods. It also instructs them how much to increase or diminish the price of their goods, so as to make or lose so much per cent.

EXAMPLES.

1. Bought a piece of cloth containing 75yd. at $5,25 per yard, and sold it at $5,75 per yard: how much was gained in the trade?

2. Bought a piece of calico containing 50yd. at 2s. 6d. per yard what must it be sold for per yard to gain £1 0s. 10d.?

50yd. at 2s. 6d.=£6 58.

Profit =£1 0s. 10d.

It must sell for

£7. 58. 10d.

50)£7 5s. 10d.(2s. 11d.

Ans. 2s. 11d.

3. Bought a hogshead of brandy at $1,25 per gallon, and sold it for $78: was there a loss or gain?

4. A merchant purchased 3275 bushels of wheat for which he paid $3517,10, but finding it damaged is willing to lose 10 per cent: what must it sell for per bushel? 223. What is the rule of loss and gain?