Bank, worth 104 %, exchanges them for United States bonds worth 105 %; how much of the latter stock does he receive? 621 15. I purchased 12 shares of stock at a premium of 5 %, and sold the same at a loss of $96; what was the selling price?

16. Having bought $64000 stock in the Cunard Line, a 2 % premium, at what price must I sell it, to gain $2560 ?

Ans. 106 %.

17. A speculator bought 250 shares in a Carson Valley mining company at 103%, and 150 shares of the Western Railroad stock at 95 %; he exchanged the whole at the same rates, for shares in the N. Y. Central Railroad at 80 %, which he afterward sold at 85%. How much did he gain? Ans. $2500.

18. I purchased stock at par, and sold the same at 3 % premium, thereby gaining $750; how many shares did I purchase? 24 19. A broker bought Illinois State bonds at 103 %, and sold at 105 %. His profits were $240; what was the amount of his purchase? Ans. $12000.

20. A man invested in mining stock when it was 4 % above par, and afterward sold his shares at 5% discount. His loss in trade was $760; how many shares did he purchase? 80

21. I invested $6864 in Government bonds at 106 %, paying 14% brokerage, and afterward sold the stock at 112 %, paying 1% brokerage; what was my gain? Ans. $208.

22. How much money must be invested in stocks at 3 %advance, in order to gain $480 by selling at 7 % advance? ] 23. How many shares of stock must be sold at 4 % discount, brokerage %, to realize $4775?

Ans. 50.

INSTALMENTS, ASSESSMENTS, AND DIVIDENDS.

481. An Installment is a portion of the capital stock required of the stockholders, as a payment on their subscription. 432. An Assessment is a sum required of stockholders, to meet the losses or the business expenses of the company.

483. Dividend is a sum paid to the stockholders from the profits of the business.

484. Gross Earnings are all the moneys received from the regular business of the company.

485. Net Earnings are the moneys left after paying expenses, losses, and the interest upon the bonds, if there be any.

486. In the division of the net earnings, or the apportionment of dividends and assessments, the calculations are made by finding the rate per cent. which the sum to be distributed or assessed bears to the entire capital stock. Hence,

487. Dividends and assessments are a percentage computed upon the par value of the stock as the base.

EXAMPLES FOR PRACTICE.

1. The Long Island Insurance Company declares a dividend of 6%; what does A receive, who owns 14 shares?

2. A canal company whose subscribed funds amount to $84000, requires an instalment of $6300; what per cent. must the stockholders pay?

OPERATION.

$6300 84000 = .071.

ANALYSIS. According to 450, we divide the instalment, $6300, which is

percentage, by the base, $84000, and obtain the rate, .07 = 7%.

3. A man owns 56 shares of railroad stock, and the company. has declared a dividend of 8 %; what does he receive?

Ans. $448.

4. I own $15000 in a mutual insurance company; how many shares shall I possess after a dividend of 6 % has been declared, payable in stock? Ans. 159 shares.

5. The Pittsburgh Gas Company declares a dividend of 15 %; what will be received on 65 shares?

6. A received $600 from a 4 % dividend; how much stock did he own? Ans. $15000.

7. The paid-in capital of an insurance company is $536000. Its receipts for one year are $99280, and its losses and expenses are $56400; what rate of dividend can it declare? Ans. 8 %.

8. The net earnings of a western turnpike are $3616, and the amount of stock is $56000; if the company declare a dividend of 6 %, what surplus revenue will it have? Ans. $256.

9. The capital stock of the Boston and Lowell Railroad Co. is $1830000, and its debt is $450000. Its gross earnings for the year 1858 were $407399, and its expenses $217621. If the company paid expenses, and interest on its debt at 55 %, what dividend would a stockholder receive who owned 30 shares?

Ans. $270.12+.

10. The charter of a new railroad company limits the stock to $800,000, of which 3 instalments of 10 %, 25 %, and 35 %, respectively, have been already paid in. The expenditures in the construction of the road have reached the sum of $540,000, and the estimated cost of completion is $400,000. If the company call in the final instalment of its stock, and assess the stockholders for the remaining outlay, what will be the rate %? Ans. 17.

11. The Bank of New York, having $156753.19 to distribute to the stockholders, declares a dividend of 5 %; what is the amount of its capital? Ans. $2,985,775.

12. The passenger earnings of a western railroad in one year were $574375.25, the freight and mail earnings were $643672.36, the whole amount of disbursements were $651113.53, and the company was able to declare a dividend of 8 %; how much scrip had the company issued? Ans. $7086676. 13. Having received a stock dividend of 5 %, I find that I own 504 shares; how many shares had I at first? Ans. 480.

14. I received a 6% dividend on Philadelphia City railroad stock, and invested the money in the same stock at 75 %. My stock had then increased to $16200; what was the amount of my dividend? Ans. $900.

15. A ferry company, whose stock is $28000, pays 5 % dividends semi-annually. The annual expenses of the ferry are $2950; what are the gross earnings? Ans. $5750.

STOCK INVESTMENTS.

488. The net earnings of a corporation are usually divided among the stockholders, in semi-annual dividends. The income of capital stock is therefore fluctuating, being dependent upon the condition of business; while the income arising from bonds, whether of government or corporations, is fixed, being a certain rate per cent., annually, of the par value, or face of the bonds.

489. Stock producing a regular income receives a designation corresponding to the rate. Thus, bonds drawing 6 % annually are called 6 per cent. stock, or 6's; stocks yielding 7 % are called 7's; and so on.

NOTE. The profitableness of an investment depends jointly upon the price paid for the stock, and the rate of income which the stock produces.

CASE I.

490. To find what income any

duce.

investment will pro

1. What income will be obtained by investing $6840 in stock bearing 6 %, and purchased at 95 % ?

the stock which the investment will purchase, (452). And since the stock bears 6 % interest, we have $7200 × .06 = $432, the annual income obtained by the investment. Hence,

RULE. Find how much stock the investment will purchase, and then compute the income at the given rate upon the par value.

EXAMPLES FOR PRACTICE.

1. The trustees of a school invested $35374.80 in the U. S. bonds as a teachers' fund, purchasing the stock at 1024 %; if the salary of the Principal be $1000, what sum will be left to assistants? Ans. $725.60, pay

2. A young man receiving a legacy of $48000, invested one half in 5% stock at 95 %, and the other half in 6% stock at

112 %, paying brokerage at %; what annual income did he secure from his legacy? Ans. $2530. 3. A capitalist holding bonds of the Illinois Central Railroad to the amount of $90000, exchanged them at the market price of 88 %, for capital stock in the same company, worth 62 %. The bonds drew 7 % annually, while the stockholders received two dividends during the year, the first of 3 %, and the second of 3 %; how much did the capitalist gain annually by the exchange? Ans. 1936.80.

5. I have $32300 to invest, and can buy New York Central 6's at 85 %, or New York Central 7's at 95 %; how much more profitable will the latter be than the former, per year? 100.

CASE II.

491. To find what sum must be invested, to obtain a given income.

1. What sum must be invested in Virginia 5 per cent. bonds, purchasable at 80 %, to obtain an income of $600?

$600.05 $1200 x .80

require $600.05

OPERATION.

$12000, stock required.
$9600, cost, or investment.

ANALYSIS. Since

$1 of the stock will obtain $.05 income,

to obtain $600 will

$12000, (Case I). Multiplying the par value

of the stock by the market price of $1, we have $12000 × .80: $9600, the cost of the required stock, or the sum to be invested. Hence the

RULE. I. Divide the given income by the % which the stock pays; the quotient will be the par value of the stock_required.

II. Multiply the par value of the stock by the market value of one dollar of the stock; the product will be the required investment.

EXAMPLES FOR PRACTICE.

1. What sum must I invest in the Michigan Central 8 per cents., selling at 851 %, to secure an annual income of $1200? Ans. $12825.