CHAPTER XXVII BONDS 376. Bonds, by Whom Issued. - Bonds are promissory notes issued by national and state governments, by municipal corporations such as counties and cities, and by private corporations. A bond having the record of ownership transferred on the books of the company. 378. Coupon Bonds.-State and municipal bonds are usually coupon bonds. That is, the bond has attached to it little slips which are really promissory notes covering the interest from year to year. These slips, called coupons, may be cut off as they become due and deposited in the banks for collection. This saves the trouble of making transfers on the books of the issuing corporation in case the bonds are sold. The coupons and the bond, when due, will be paid to anyone having them in his possession. 379. Mortgages. -A mortgage is a conditional instrument of sale. The sale becomes effective in case certain payments specified in the mortgage are not made. Bonds issued by industrial corporations are usually secured by mortgages on the property of the corporation. A very common method of borrowing money is to give a promissory note secured by mortgage on any sort of property. COUPON BOND 380. Consols and Rentes. The debt of the British government (up to the time of the Great War) was represented by the so-called Consols (Consolidated Debts), bearing 21% interest and running indefinitely. The bonds of the French government are called rentes, and bear interest at the rate of 3%. 381. Designation of Bonds. - Bonds are designated by the name of the issues, the date of maturity, and the rate of interest. Thus N. Y. City 4's 1956, means a bond issued by New York City bearing 4% interest and due in 1956. Similarly we have U. S. 4's 1925. 382. Common Stocks and Bonds Compared. 1. Dividend depends upon prosperity 1. Bear a definite rate of interest of the company. 2. Stockholder has a voice in the man agement of the corporation by voting for directors. 2. payable at fixed times. Bondholder is merely a creditor and has no voice in the management of the corporation. 3. The stock is not payable at any 3. The bond is payable at a definite time but remains in the nature of time. a perpetual source of income. 383. Problems on Long Term Bonds. If the interest on a long term bond is very near the prevailing rates of income on safe investments then the problems on such a bond are like those on stocks. Example 1. New York City 44's 1964 issued in 1914 are sold at an average of $101.45. Find the rate of income on the investment, (a) allowing no brokerage. (b) allowing % for brokerage. Solution. This problem is exactly like those solved in §§ 371, 375. Example 2. What must a long term 44% bond be bought for to give an income of 4.49% on the investment? (a) allowing no brokerage. (b) allowing % brokerage. Solution. (a) of this problem is just like that of § 374. 384. Problems on Short Term Bonds. When the remaining term of the bond is short or when great accuracy is required, the problems on bonds are very different from those on stocks and are not considered here. CHAPTER XXVIII GRAPHIC REPRESENTATION 385. Uses of the Graph. The graph is used to represent statistical information directly to the eye by means of some sort of diagrammatic representation of the figures involved. Prices of commodities, the market values of stocks and bonds, variations in wages and in profits are but a few of the many kinds of facts which are frequently represented by graphs. 386. Representation of Population Statistics. On this page is a copy of a figure used in the report of the 13th census to represent the nationality of the foreign-born persons in the United States in 1900 and in 1910. The numbers used represent the percentage of the total foreign-born population which was born in each country. Foreign-born population, by principal countries of birth: 1910 and 1900. Total foreign-born, 1910: 13,515,886. Total foreign-born, 1900: 10,341,276. 387. Industrial Statistics. On the opposite page is a graphic representation of the value of products of different industries as given by a recent census. Example. From the data given on this page, find the per cent of value of all products produced by the different industries. After computing the per cents required to fill out the above table, make a graph representing these receipts. The beginning of this graph is shown in the lower part of the figure on the opposite page. In practice a very large variety of graphic representation is used. Thus men of different sizes are used to compare armies, ships of different sizes to compare navies. Very many such representations are self-explanatory. On the other hand the problem of selecting the most fortunate type of graphic representation in the various cases that arise is a very difficult one. In this field there is still room for much ingenuity and originality. A visit to the offices of a large concern such as a broker's office or a manufacturing company would reveal varied and interesting uses of graphs. |