10. A man pays $61.50 annually on a $2500 policy. What is the rate of premium per thousand dollars?

11. At the age of 21 the annual premium on $1000 of term insurance for 10 years is $11, and the dividends decrease each premium, after the first, 15% of this sum. What is the total net cost of $10,000 of such insurance for 10 years?

12. At the age of 21 the annual premium on an ordinary -life policy is $19.12 per thousand. What would be the total amount of premiums paid on $5000 in 20 years? What would be the net amount if the company allowed $198 per thousand in dividends during this period?

13. How much more would the policy of Ex. 12 cost if taken out at the age of 32, the premium then being $25.09, and the dividends for 20 years being $237 per thousand?

14. At the age of 21 the annual premium on a 20-payment limited life policy is $28.98, and the dividends allowed by a certain company amount to $222 per thousand in 20 years. What is the net cost of $3000 of such insurance before it is paid up?

Of course the insured also loses the interest on the premiums paid, but this item is not required in the example.

15. How much more would the policy of Ex. 14 cost if taken out at the age of 50, the premium then being $54.65, and the total amount of the dividends for 20 years being $625 per thousand?

16. At the age of 21 the annual premium on a 20-year endowment policy is $48.48, and the dividends amount to $353 per thousand during this period. What is the difference between the amount paid the company (less dividends) and the amount received in return on a $5000 policy?

II. BUSINESS ARITHMETIC COMPLETED. MENSURATION

CORPORATIONS

533. Corporation. The laws of our various states permit a number of persons who wish to go into business together to organize as one body, called a corporation.

534. Capital. The members contribute the money to start the business. This is called the capital.

535. Shares of stock. The capital is divided into shares, usually of $100 each, although sometimes less. Each person who owns one or more shares is a stockholder, and receives a certificate of stock stating how many shares he owns.

For example, if the capital is $100,000, and the shares are $100 each, there are 1000 shares. If a man has 50 shares, he owns $5000 worth of stock, or 5% of the whole corporation.

536. Directors and officers. The stockholders elect a few of their number to have general direction of the company. These are called directors, and they elect the officers.

537. Dividends. The earnings of the company, after paying the expenses and providing for a bank account sufficient for probable needs, are divided into dividends, the directors deciding on the rate of dividend. These dividends are sent to the stockholders, by means of checks.

For example, if a company with a capital of $100,000 earns $6000 beyond all expenses, it may declare a 6% dividend. Then a man who owns $5000 worth of stock will receive a check for $300.

ORAL EXERCISE

State the dividends to be paid on the following: 1. $3000, 5%. 2. $7000, 4%. 3. $12,000, 51%. 4. $2500, 3%. 5. $8000, 11%. 6. $20,000, 21%.

WRITTEN EXERCISE

1. How many shares in a company with $1,500,000 capital? (In these exercises let one share be $100.)

2. A company divides $50,000 in dividends, and stockholders receive $4 per share. What is the capital?

3. A company with $3,000,000 capital declares a 5% dividend. What does the holder of 100 shares receive?

4. A company with $500,000 capital divides $45,000 in dividends. What does the holder of 30 shares receive?

5. How much does the holder of 30 shares of a certain railway stock receive when a 41% dividend is declared? 6. A man receives from the treasurer of a certain company $25 every three months, as dividends on his 20 shares of stock. What is the rate of quarterly dividends?

7. A company with a capital of 50 million dollars declares a dividend of 23% every six months. How much money does it distribute among its stockholders annually?

8. A company with $250,000 capital declares four dividends a year, each of 14%. What are the total annual dividends? What is the annual income of a man who owns 50 shares?

9. A company with $350,000 capital declares two dividends a year. A stockholder who owns 20 shares receives an annual income of $110. What is the rate of the semiannual dividends?

10. A company with a capital of $250,000 has earned $15,000 this year above all expenses. It decides to save $2500 of this for emergencies, and to divide the rest in dividends. What is the rate?

538. Above and below par. If stock is paying a high rate of dividend, that is, more than can be received from good ordinary investments, people will be so anxious to buy it that they will pay more than $100 for a $100 share. It is then said to be above par. If a $100 share can be bought for just $100, the dividends are about on a par with other investments, and the stock is said to be at par. If the dividends are low, say 1% or 2%, people will not be anxious to buy the stock, and it will sell below par.

539. Buying stock. Stocks are usually bought and sold through a broker, generally at a stock exchange, a kind of auction room for such business.

540. Brokerage. The broker charges brokerage or commission, usually 1% of the par value, making this charge both for buying and for selling.

541. Meaning of stock quotations. A quotation of 1183 means that $100 worth of stock will cost $118.75 besides $ (or 12 ct.) brokerage. The buyer then pays $118.871 per share, while the seller, who must also pay his broker, receives $118.75 – $0.12 – $118.62 per share.

=

In stock quotations fractions are always expressed in halves, fourths, or eighths. Fractions of a share cannot be bought on the stock exchange. The standard amount bought is 100 shares, although smaller lots are often purchased.

542. Illustrative problems. 1. What is the cost of 10 shares of stock quoted at 137, brokerage as usual? One share costs $1371 + $ brokerage, or $137.

10 shares cost 10 times $137, or $1372.50.

2. What is the amount received from the sale of 100 shares of stock quoted at 96g, allowing the usual brokerage? One share brings $96§ $ brokerage, or $961⁄2. 100 shares bring 100 times $961, or $9650.

ORAL EXERCISE

State the cost of 10 shares of stock quoted as follows,

adding the brokerage in each case:

State the amount received from the sale of 10 shares

of stock quoted as follows, allowing for the brokerage:

State the cost of the following, including brokerage :

21. 100 shares @ 477.

22. 100 shares @ 347.

23. 50 shares @ 1197.

24. 50 shares @ 1237.

WRITTEN EXERCISE

Find the cost of the following, including brokerage:

Find the amount received from the sale of the following:

7. 80 shares @ 1341.

9. 175 shares @ 169.

11. 140 shares @ 1473.

8. 500 shares @ 64.

10. 250 shares @ 178.

12. 120 shares @ 142.

13. A man paid, including brokerage, $2047.50 for 30 shares of stock. At what price was it quoted?

14. A man received for some stock, less the brokerage, $5195, when it was quoted at 130. How much did he sell?