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1. If U. S. 6's are selling at 106, what will $5000 in bonds cost?

$5000 × 1.06 = $5306.25, Ans.

2. If a person invests $ 13265.625 in U. S. 6's at 1063, what amount in bonds will he receive?

3. I own 12 U. S. 5's of $1000 each; what is my annual income?

4. If I purchase a U. S. 6 % bond at 106, what per cent on my investment do I receive annually?

5. What ought I to pay a broker for two $500 6's at 106, three $100 4's at 104ğ, and five $500 4's at 99, with his brokerage of 4% in addition to the prices named ?

NOTE. Brokerage is reckoned on par value (Art. 315, Note 1).

6. What must I pay for $500 U. S. 4's at 100, $2000 New York 6's at 107, $1500 St. Louis 7's at 110, $2500 Union Pacific 6's at 109, $3000 Cleveland 8's at 109, including brokerage of % ?

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7. I invest $32500 in 8% bonds, at 30 % premium. What income do I receive?

8. If a broker sells for me five $500 4's at 99 and reinvests the proceeds in $100 6's at 106, if he takes a commission of % on each transaction, how many bonds does he buy, and what balance of cash will be left to my credit?

9. What sum must I invest in U. S. 5's at 106 to have an annual income of $1000 ?

10. What per cent on the investment do 6 % bonds bought at 90 pay?

11. Bought $1000 4 % bonds maturing in three years at 95. How much income do I get in all, if I hold the bonds till paid at maturity?

12. Bought $1000 6's at 120 and $1000 7's at 140; what per cent of the investment do I get on each for income?

13. Suppose the bonds in Ex. 12 are both payable at the same time and I hold them till paid, which is the better investment and by how much?

14. If I purchase $15000 Boston 5's, interest payable semiannually, and $ 15000 U. S. 5's, interest payable quarterly at the same price, which pays the most annual income and how much, provided the several payments of interest are on receipt put at interest at 6 % ?

15. I have $12075 to invest. Which will pay the greater annual income, Missouri 6's at 105, or Chicago 7's at 115? How much greater?

16. How many $ 1000 U. S. 5's must I buy to have an income each year of 1250? How much must I invest if these bonds cost 1044 ?

17. Which yields the greater percentage on the investment. U. S. 4's at 99, or Union Pacific Railroad 7's at 1083? How much greater?

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18. Which is the better investment if both are redeemed in years, U. S. 6's at 1064, or 4's at 99? How much better?

19. How much shall I send to a broker that he may take out his brokerage of 4% and purchase for me 7 Boston 6's, of $100 each, selling at 115?

20. How much must I invest in New York 7's at 120, interest payable semi-annually, to have a semi-annual income of $1400! What would be the brokerage at % for the purchase of these bonds by a broker?

21. Which pays the greater per cent of interest semi-annually on the investment, New York 6's at 109, or Boston and Albany 7's at 120? How much greater?

EXCHANGE.

391. Exchange, in commerce, is a mode of paying debts due in distant places by means of drafts, or bills of exchange.

To explain the operation of exchange and show its benefits, let us suppose that A of Boston owes B of San Francisco $1000, and C of San Francisco owes D of Boston $1000. Now A and C can each pay his debt by sending $1000 in gold or silver and paying the cost of transportation and insurance; but exchange furnishes a better way. Thus, D of Boston writes a request (bill of exchange) to C of San Francisco to pay A of Boston, or his order, $1000. A buys this bill of exchange of D, indorses the bill, and sends it to B of San Francisco, who presents it to C, and C pays B the $1000; thus A and C have paid their debts and B and D have received their dues without the trouble, cost, or risk of transporting a dollar in money or merchandise.

392. A Draft, or Bill of Exchange, is a written order, or request, to one person to pay to another a certain sum of money, and charge the same to the account of the person who makes the request.

500.

Boston, Ahrit 8, 1895.

At sight, pay to the order of James S. Frost, five hundred dollars, and charge to the account of

William P. Mellen.

To Charles J. Rose, Chicago, Ill.

393. The Maker or Drawer of a draft or bill of exchange is the person who requests another to pay; the Drawee is the person who is requested to pay; and the Payee is the

person to whom the drawee is requested to pay the money. Thus, in the preceding draft,

The drawer is William P. Mellen.
The drawee is Charles J. Rose.

The payee is James S. Frost.

394. Some bills of exchange are made payable at sight, that is, as soon as they are presented to the drawee; others are made payable on a given day or in a specified time, say 30, 60, or 90 days after sight. In some States 3 days of grace (Art. 374) are added to the time specified in the bill.

395. The payee, instead of receiving the money from the drawee, may sell the bill to another, and he in turn may sell it again, and so on indefinitely. Any person who buys the bill is called the Buyer or Remitter. The person who owns the bill at any given time is the Holder or Possessor.

396. The payee and the several buyers, by writing their names across the back of the bill, become Indorsers, and responsible to the holder for the payment of the bill at maturity, that is, at the time when the bill becomes due.

397. Bills payable in a given time after sight are presented to the drawee, and if he agrees to pay, he writes the word "Accepted" and his name, with the date, across the face, or on some other part of the bill, and returns it to the holder. The drawee is then the Acceptor, and responsible for the payment of the bill when due.

398. Bills of exchange, payable after sight, like promissory notes, are subject to a discount for the term of credit, the discount being computed on the face of the bill.

$1000.

399.

Written Exercises.

BOSTON, May 17, 1895.

At sight, pay Sam'l Tyng, or order, one thousand dollars, value received, and charge the same to my account. ALFRED DWIGHT.

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1. What is the cost of this draft at % premium?

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Sixty days after sight, pay to W. Pool, or bearer, three hundred twenty dollars, value received, and charge the same to the account of FRANK ADAMS & Co.

To Albert Devoe, }

New York.

2. What is the cost of this draft at % discount?

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3. What is the cost of a draft on Omaha for $5328, at 3 % discount?

4. What is the cost of a draft on Sacramento for $8750, at 1 % premium?

5. What ought I to pay for a draft of $ 640, if exchange is at a discount of 3% ?

6. If the rate of exchange is % premium, what will a draft of $935 cost?

7. My agent in St. Louis bought a draft on New York, at % premium, for $8160; what was the face of the draft?

$1 + $0.0025 = $1.0025, cost of draft of $ 1.
$81601.0025 = $8139.65, Ans.

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