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6. The capital stock of a railroad is $895,750; the passenger earnings in 1 yr. were $74,537.50, and the freight earnings $94,567.50; the disbursements were $107,963; what rate of dividend can be declared? Ans. 6%; $7397 surplus.

7. A company whose capital was $6,000,000, "watered" it by the issue of 25% of new stock; if it divided $450,000 among the stockholders after the watering, what will be the rate per cent. of the dividend? Ans. 6%.

8. The charter of a new railroad company fixes the capital stock at $1,000,000, of which three installments of 25%, 35%, and 30%, respectively, have already been called in; the amount already expended is $750,000, and it is estimated that $450,000 more will be required to finish the road. After the last installment is called in, what must be the rate per cent. of the assessment on the stockholders to make up the deficiency? Ans. 20%.

PAR, PREMIUM, AND DISCOUNT.

556. Capital is property consisting of Money, Bonds, Stocks, Drafts, etc.

557. Drafts, Checks, and Bills of Exchange are written orders for the payment of money at some definite place. 558. The Par Value of capital is the value marked on its face, called the nominal value or face.

559. The Real Value or Market Value of capital is what it will sell for.

560. Capital is At Par when it sells for its nominal value or its face.

561. Capital is Above Par, or at a Premium, or at an Advance, when it sells for more than its nominal value.

562. Capital is Below Par, or at a Discount, when it sells for less than its nominal value.

Stocks are often named from the rate of interest they draw; thus, we have 5's, 6's, 7-30's, etc. The time to run or date when due sometimes gives the name: as, 5-20's, '81's, etc.

The Stock of a company will generally be above par when the company is doing a lucrative business, and below par when it is doing a poor

business. The stock of a town, city, etc., varies according to the confidence in its security, the fluctuations of the money-markets, etc.

If the paper currency of a country becomes depreciated in value, gold becomes an object of investment, the same as stocks. The value of gold being fixed, its fluctuations in price indicate the changes in the value of the currency. Thus, when gold is said to be at a premium, currency is really at a discount.

563. The Base upon which premium and discount are estimated is the par value.

564. The Quantities considered are four: 1. The Par Value; 2. The Rate; 3. The Premium or Discount; 4. The Real Value.

NOTE. The problems under this subject are solved without brokeragethe sales and exchanges being regarded as direct without the aid of a broker.

CASE I.

565. Given, the par value and the rate of premium or discount, to find the premium or discount, or the real value.

1. A bought 45 shares of stock ($50) at 7% premium; required the premium and cost, or real value.

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Rule I.-Multiply the par value by the rate, to find the premium or discount.

Rule II.-Multiply the par value by 1 plus the rate of premium, or by 1 minus the rate of discount, to find the real value.

2. A broker bought 27 shares of Penn. R. R. stock ($50) at 45, and sold it at 55; how much did he gain? Ans. $270. 3. A banker bought $960 in gold at a premium of 121%, and sold it at a premium of 171%; how much did he make by the operation? Ans. $45.60.

4. Bought 172 shares of Reading R. R. stock ($50) for 46ğ, and gave in payment a draft on St. Louis for $7500 at 1% discount, and the balance in cash; how much cash did I pay? Ans. $585.12.

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5. A exchanged 82 shares of bank stock ($50) at 31% premium for 106 shares of Camden and Atlantic R. R. stock, at 47, paying the balance in cash; how much cash did he pay? Ans. $791.50.

6. If I buy $6800 U. S. 5-20's at 108, and $7200 7-30's, at 102; what is the market value of each? Ans. $7344.

CASE II.

566. Given, the rate and the premium or discount or the real value, to find the par value.

1. A sold some drafts at 31% premium, and gained $210 on the par value; what was the par value?

SOLUTION.-If the premium at 34% is $210, then .03 times the par value equals $210; hence the par value equals $210 divided by .03, which we find is $6000.

OPERATION.

$210.03=$6000

Rule I. Divide the premium or discount by the rate, to find the par value.

Rule II.-Divide the real value by 1 plus the rate of premium, or by 1 minus the rate of discount, to find the par value.

2. When State 6's are 96%, what is the par value of the amount that can be bought for $4992? Ans. $5200.

3. A speculator sold 68 shares of bank stock at a premium of 41%, and received $3553; what was the par value of a share? Ans. $50.

4. A broker receives $51,000 to invest in Illinois 6's standing at 85; how many $1000 bonds can he buy? Ans. 60.

5. Required the face of a draft at % discount, which will buy 75 shares of United Companies of New Jersey R. R. stock ($100), selling at 1237. Ans. $9337.31.

6. How many shares of canal stock ($50) at 95% must I sell in order that the proceeds, +$9.50, invested in U. S. 7-30's at 108%, may have a par value of $1900? Ans. 43.

7. During a commercial panic, a merchant, wishing to raise $20,000, was obliged to sell certain stocks; the market value being 771⁄2, how many shares must he sell, the par being $100? Ans. 258 shares, and add $5 besides.

8. I exchanged $56,000 in drafts at 11% discount, and $2500 5-20's at 110 for New Jersey Central ($50) at 95%; how many shares did I buy? Ans. 1222, with $5 rem.

CASE III.

567. Given, the par value and the real value or the premium or discount, to find the rate of premium or discount.

1. A sold some stock whose face value was $6000, at a discount of $420; what was the rate of discount?

SOLUTION. Since the premium equals the par value multiplied by the rate, $6000 multiplied by the rate equals $420; hence the rate equals $420 divided by $6000, which we find is .07.

OPERATION.

$420-$6000=.07

Rule I.-Divide the premium or discount by the par value, to find the rate.

Rule II-Divide the difference between the real value and the par value by the par value, to find the rate.

2. A man bought 106 shares of railroad stock ($50) for $4902.50; what was the rate of discount? Ans. 7%.

3. If the above mentioned 106 shares were sold for $5591.50, what is the rate of premium and rate of gain?

Ans. Premium, 51%; gain, 147% •

4. Bought $2000 City 6's at 1021, and sold them at a gain of $65; at what rate were they sold? Ans. 105.

6. Bought $1000 in $1200; what was the gain per cent.?

5. In 1872 I gave $250 in currency for $200 in gold; what was the premium on gold and the discount on currency? Ans. 25% premium; 20% discount. gold, premium 121%, and sold it for premium on the sale, and what the Ans. 20% premium; 63% gain. 7. B bought 84 shares of canal stock ($50) at 20% premium, and gave in payment a draft on New York for $5000; what was the rate of premium of the draft? Ans. %.

8. Sold 82 shares of North Pennsylvania R. R. stock for $4438.25, and bought with the proceeds, +$3, 95 shares Lehigh Navigation; what were the premium and discount of the two stocks? Ans. 84% premium; 61% discount.

BROKERAGE.

568. Brokerage is a percentage charged by brokers for the transaction of business.

569. A Broker is a person who buys or sells money, stocks, bills of exchange, real estate, etc., for others.

570. A Stock Broker is one who deals in stocks; he is generally called simply a Broker. The operations of a stock broker are called Stock-Jobbing.

For convenience in carrying on their business, the brokers of large cities associate themselves in a "Board," which meets at the "Stock Exchange." At the meeting, the stocks on the list are called in a certain order, and those wishing to buy or sell, bid for and offer the stock as it is reached. If the sale is for cash, the certificate for the stock sold is delivered that day; if it is regular, the certificate is delivered and the money paid the next day.

An operator "sells short" when he sells stock that he does not hold, borrowing it for delivery, and hoping to buy at a lower rate. If stocks should fall before he is obliged to replace what he has borrowed, he makes a profit; but if they should rise, he will have to "cover" at an advance, and lose the difference. An operator is "long" when he buys stock and holds it in expectation of a rise. Those operators who try to depress prices are called bears; those who try to raise prices are called bulls.

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Contracts are sometimes made, in consideration of a certain sum, to take or deliver, within a specified time, so many shares of a certain stock at a certain price. These contracts are known as calls" and "puts." 571. Stock Quotations are reports of sales of stocks. Stocks are quoted either at the price of one share, or at the price of $100 of par value of the stock, whatever be the par value of a share. The former method is used in Philadelphia; the latter in New York.

572. Various Abbreviations are used in stock quotations; among the principal ones are the following:

Coup. and Reg. are abbreviations used for coupon and registered; ex coup.-without coupon-is used when a coupon for interest just due has been cut off before the sale of the bond; ex int.-without interest-when interest just due is not to be paid to the purchaser. Thus, "20,000 U. S. 5-20 coup. 1864, 118}," signifies that 5-20 coupon bonds of the issue of 1864, whose par value was $20,000, sold at $118 for $100.

1st m.-first mortgage; conv.-convertible-means that the bonds may be exchanged for the stock of the company. Thus, "6000 Erie 1st m. 100 conv.," signifies that bonds of the Erie Railroad, secured by a first mortgage, whose par value was $6000, and which may be exchanged for stock of the company, were selling at par.

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