BONDS

Whenever a corporation, such as a town or a city or a stock company, wishes to borrow money for some special purpose, it issues bonds, or interest-bearing notes. These bonds are promises to pay a definite amount at a definite time, with interest at a fixed rate. They are the promissory notes of a corporation.

Bonds are generally issued in $1,000, $500, or $100 denominations and they usually run for a long time, 15, 20, or 30 years. Each bond is numbered to identify it. The par value of a bond is its face value. The market value of a bond may be different from the par value. As a rule, the market values of bonds do not vary as much as market values of stocks.

A registered bond bears the purchaser's name and it is not transferable without his indorsement. Interest due on a registered bond is sent directly by check to the owner of the bond.

A coupon bond does not bear the purchaser's name. If a bond is to run fifteen years and interest is payable semiannually, there are thirty interest coupons attached to the bond. Each coupon represents the interest for six months and it is payable to the bearer. It is cut from the bond and presented at any bank for collection.

No matter how much a bond may vary in its market value during its run, the corporation issuing it guarantees the payment in full of its par value or its face value when it matures.

Bonds are a much safer investment than stock in the same company, and they should appeal especially to the small investor. They should always be kept in a safe place, preferably in a safe deposit box.

Here is a coupon bond with six of the coupons still attached. Compare it with the stock certificate on page 227. Can you tell some points of difference between this and the certificate of stock?

Bonds are bought and sold in stock exchanges by brokers. The brokerage on railroad, public utility, and other bonds having more than five years to run is $1.50 per $1,000 par value, with a minimum charge of $1.00 for any transaction. Government bonds are exempt from the regular rates.

Here are the newspaper quotations on a few bonds for one day. The "sales" are in terms of $1,000.

The name of a bond often tells much about the bond. "Goody'r Tire 8's 1931," refers to the Goodyear Tire Company's 8% bonds which are due in 1931.

As bonds of different face values are issued by the same company the newspaper quotations should be considered percentages of the face value. When a Penn. R. R. bond is quoted, 1081, it means that the market value of a $1,000 bond is 1081% of $1,000 or $1,082.50.

The cost of such a bond would be $1,082.50 plus the brokerage of $1.50, making the entire cost, $1,084.

When one is selling bonds, the brokerage must be deducted from the selling price. The result is the proceeds of the sale.

When a purchaser buys bonds between interest dates, he pays the owner of the bonds the interest earned up to the day of the purchase. This is called accrued interest. The new owner of the bonds receives this interest back on the next interest day.

4. 200 shares Adams Express.

5. 100 shares of Pennsylvania.

6. 200 shares of Atlas Machine Company at 60%.

Deducting 15¢ per share brokerage, what was received for selling these stocks at the "high prices" on page 230? 7. 50 shares Union Pacific, pfd.

8. 100 shares United States Steel.

9. 80 shares Adams Express.

10. 200 shares Pennsylvania.

11. How much would I receive from selling 150 shares of Acme Manufacturing Company at 58?

12. How much was gained by buying 10 shares of Baldwin Locomotive at 123 and selling it at 1274?

13. How much was lost by buying 50 shares of U. S. Rubber, pfd. at 83ğ and selling it at 80%?

14. A man bought 100 shares of Pullman at 122 and sold it at 125. How much did he make?

15. 150 shares of 6% stock were bought at $110 a share. Find the annual income.

16. I invested $7,600 in some 5% stock quoted at 95. What income will I receive?

17. I bought at $120 a share, some stock that pays an annual dividend of 6% on the par value of $100. How much dividend do I get on each share? What per cent do I actually make on my money invested?

18. What per cent do I receive on my money invested, if I buy, at $80 a share, some stock that pays 5% dividends?

19. Bring a newspaper to school and copy from it on the blackboard the closing prices of six or eight stocks. Do this each day for two weeks and note how prices change.

BONDS

Whenever a corporation, such as a town or a city or a stock company, wishes to borrow money for some special purpose, it issues bonds, or interest-bearing notes. These bonds are promises to pay a definite amount at a definite time, with interest at a fixed rate. They are the promissory notes of a corporation.

Bonds are generally issued in $1,000, $500, or $100 denominations and they usually run for a long time, 15, 20, or 30 years. Each bond is numbered to identify it. The par value of a bond is its face value. The market value of a bond may be different from the par value. As a rule, the market values of bonds do not vary as much as market values of stocks.

A registered bond bears the purchaser's name and it is not transferable without his indorsement. Interest due on a registered bond is sent directly by check to the owner of the bond.

A coupon bond does not bear the purchaser's name. If a bond is to run fifteen years and interest is payable semiannually, there are thirty interest coupons attached to the bond. Each coupon represents the interest for six months and it is payable to the bearer. It is cut from the bond and presented at any bank for collection.

No matter how much a bond may vary in its market value during its run, the corporation issuing it guarantees the payment in full of its par value or its face value when it matures.

Bonds are a much safer investment than stock in the same company, and they should appeal especially to the small investor. They should always be kept in a safe place, preferably in a safe deposit box.