INSURANCE.

269. INSURANCE is an obligation, generally in writing, by which individuals or companies bind themselves to indemnify the owners of certain property, such as ships, goods, houses, &c., from loss or hazard.

270. The BASE of insurance, is the amount for which the property is insured.

271. The POLICY is the written agreement made by the parties.

272. PREMIUM is the amount paid by him who owns the property, to those who insure it.

273. To find the premium, when the base and rate are known.

Rule.-Same as in Art. 257.

Examples.

1. What is the premium for the insurance of a house valued at $8754, against loss by fire, for one year, at per cent.?

2. What would be the premium for insuring a ship and cargo, valued at $37500, from New York to Liverpool, at 3 per cent.?

3. What would be the insurance on a ship valued at $47520, at per cent.? Also, at per cent.?

4. A merchant wishes to insure on a vessel and cargo at sea, valued at $28800: what will be the premium, at 12 per cent.?

269. What is Insurance ?-270. What is the base of insurance? 271. What is the policy?-272. What is the premium?

273. How do you find the premium, when the base and rate are known?

5. A merchant owns three-fourths of a ship valued at $24000, and insures his interest at 2 per cent.: what does he pay for his policy?

6. A merchant learns that his vessel and cargo, valued at $36000, have been injured to the amount of $12000; he effects an insurance on the remainder, at 51⁄2 per cent.: what premium does he pay?

7. My furniture, worth $3440, is insured at 23 per cent.; my house, worth $10000, at 1 per cent.; and my barn, horses, and carriages, worth $1500, at 34 per cent.: what is the whole amount of my insurance?

8. A merchant imported 250 pieces of broadcloth, each piece containing 36 yards, at $3.25 a yard; he paid 4 per cent. insurance on the selling price, $4.50 a yard: if the goods were destroyed by fire, and he got the amount of insurance, how much did he make?

9. A vessel and cargo, worth $65000, are damaged to the amount of 20 per cent., and there is an insurance of 50 per cent. on the loss: how much will the owner receive?

STOCKS AND BROKERAGE.

274. A CORPORATION is a collection of persons, by law to do business together.

authorized

275. A CHARTER is the law which defines their rights, powers, and duties.

276. CAPITAL, or STOCK, is the money paid in to carry on the business of the corporation.

277. STOCKHOLDERS are the individuals composing the corporation.

278. SHARES are portions of the stock owned by the stockholders.

279. CERTIFICATES are the written evidences of the ownership of stock.

280. UNITED STATES STOCKS, or STATE STOCKS, are the bonds of the United States, or of a State, bearing a fixed interest.

281. The PAR VALUE of a stock, is the number of dollars named in each share. Shares are usually of $100 each; sometimes $50, and sometimes $25.

282. The MARKET VALUE of a stock, is what the stock brings per share, when sold for cash.

283. PREMIUM is the rate per cent. which a stock sells for, above its par value.

284. DISCOUNT is the rate per cent. which a stock sells for, below its par value.

285. BROKERAGE is an allowance made to an agent who buys or sells stock, uncurrent money, or bills of exchange. The brokerage, in the city of New York, is generally onefourth per cent. on the par value of the stock.

286. To find the market value of stock, when at a premium or discount.

1. What is the value of 150 shares of Erie stock, par 100, which is selling at 16 per cent. discount?

ANALYSIS.-150 shares are nominally worth $15000; 100-16=84, which is the rate per cent. to be taken of the base, $15000.

Rule.-Multiply the nominal value by the rate per cent., to be taken of the base, and the product will be the market value.

2. What is the market value of 200 shares of bank stock, par at 50, which is selling at 20 per cent. premium?

274. What is a corporation?-275. What is a charter? 276. What is capital, or stock?-277. What are stockholders ? 278. What are shares ?-279. What are certificates?

280. What are United States or State stocks?

281. What is par value?-282. What is market value? 283. What is premium ?-284. What is discount?

285. What is brokerage?

286. How do you find the market value of stock?

3. How much must be paid for $25600 of stock, which is selling at 87 per cent.?

4. A broken bank has a circulation of $98000, and purchases the bills at 85 per cent.: how much is made by the operation?

5. A broker sells $50000 of stock on commission, at per cent. what is the brokerage?

6. What must be paid for 175 shares of Hudson River Railroad stock, par 100, which is selling at 9 per cent. discount, if the brokerage be per cent.?

7. A gentleman directs a broker to purchase 250 shares of bank stock, par 100, which is selling at 8 per cent. premium: what is its cost, if the brokerage be at per cent.?

287. To find how much stock, at par value, can be purchased for a given sum.

1. What amount of stock, at par value, can be purchased for $12192, when it is at 5 per cent. discount, if 1 per cent. he charged for brokerage?

ANALYSIS. Since the stock is at 5 per cent. discount, $1 of it would cost 95 cents: adding the brokerage, it will cost 96 cents: Hence,

OPERATION.

.95.01.96)12192

$12700

Rule.-Divide the given sum by the cost of 1 dollar of the stock, plus the brokerage.

2. What amount of government stock can I buy for $15525, when it is selling at 3 per cent. premium?

3. How many shares of bank stock, par 25, can be bought for $2730, when it is selling at 5 per cent. premium ?

4. A broker is authorized to expend $20450 in purchasing N. Y. State stocks, which are selling at 2 per cent. premium : what amount of stock does he buy, after allowing per cent. brokerage?

5. Erie Railroad stock is selling at 24 per cent. discount, and brokerage is charged at per cent.: how many shares can be bought for $9195?

287. How do you find the amount of stock which can be pur chased for a given sum?

INTEREST.

288. INTEREST is a payment for the use of money. 289. PRINCIPAL is the money on which interest is paid. 290. The RATE of interest, is the per cent. paid for 1 year. 291. AMOUNT is the sum of the principal and the interest. Interest is always reckoned at a certain rate, by the year, or per annum.

In interest, by general custom, a year consists of 12 months, each having 30 days; hence, in a year, for computing interest, there are 360 days.

In almost every country and State, the rate of interest is fixed by law, and is called, the Legal Rate. This rate differs in different States and countries.

Any rate above the legal rate, is usury, which is forbidden by law.

CASE I.

292. To find the interest on any principal for one or more years.

1. What is the interest of $1960, for 4 years, at 7 per cent.?

ANALYSIS. The principal is the base, and the interest is the percentage, which is found by multiplying the principal by the rate; therefore, $137.20 is the interest for 1 year, and this interest multiplied by 4, gives the interest for 4 years: Hence,

OPERATION.

$1960

.07, rate 137.20, int. for 1 yr. 4, No. of years.

$548.80

Rule.-Multiply the principal by the rate, expressed decimally, and the product by the number of years.

288. What is Interest?-289. What is principal ?-290. What is rate of interest ?-291. What is amount? What does per annum mean? What is legal interest?

292. How do you find the interest of any principal, for any number of years? Give the analysis.