254. The Market or Real Value of stock is the price it will sell for in the market.

255. A Dividend is a sum paid to stockholders from the profits of the business of the company.

256. An Assessment is a sum required of stockholders to meet the losses or expenses of the business of the company.

257. Premium, or advance, and discount on stock, dividends, and assessments, are computed at a certain per cent upon the original or par value of the shares of the stock.

258. A Stock Broker is a person who buys and sells stocks, either for himself, or as an agent of another.

259. The calculations in stock-jobbing are based upon the following relations:

I. Premium, discount, and brokerage are each a percentage, computed upon the par value of the stock as the base.

II. The market value of stock, or the proceeds of a sale, is the amount, or difference, according as the sum is greater or less than the par value.

1. In all examples relating to stocks, $100 will be considered a share, unless otherwise stated. When we speak of a stock as being at 105, 110, 95, etc., we mean that one $100 share can be bought for $105, $ 110, $95, respectively.

2. The rate of brokerage in New York City has been fixed by custom at per cent.

260. A Bond is a written instrument to secure the payment of a sum of money at or before a specified

261. Net Earnings are the moneys left from the profits of a business after paying expenses, losses, and the interest upon the bonds.

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.

262. Federal or United States Bonds are payable at a fixed date, and are known and quoted in commercial transactions by the rate of interest they bear.

Thus, U. S. 4's, that is, United States Bonds bearing 4% interest. Securities fluctuate in value from various causes. On this account the newspapers give daily quotations.

Below are the closing quotations of the principal investment bonds for two successive days in 1891:

These daily accounts of the state of the market enable purchasers and sellers to decide whether it is to their advantage to purchase or to sell certain securities at any given day.

If the daily reports show a steady rise in values, purchasers are eager to buy, and holders are not anxious to sell.

When the quotations are lower from day to day, the holders wish to sell and the buyers are generally very cautious respecting investment.

EXAMPLES.

263. To find the value of stock when at a

premium or discount.

1. What will 32 shares of bank stock cost at 8% premium, brokerage %?

SOLUTION.

$1.08+ $.0025= $1.0825.

$1.0825 × 3200 = $ 3464.

At $100 a share the par value of 32 shares will be $3200. To find the price of stock, we add the rate of premium to $1; to this result add the brokerage, and we have the cost of $1 = $1.0825. If $1 worth of stock costs 1.0825, $3200 worth will cost 3200 times $1.0825, which is $3464.

RULE.

Multiply the cost of $1 by the number indicating the par value of the stock.

If the stock in the above example had been at a discount of 8 per cent, $1 worth of stock would have cost $1-$.08+ $.0025 brokerage = $.9225, and $3200 worth 3200 times $.9225.

2. If the stock of an insurance company sells at 5% below par, what will 12 shares of the stock cost?

Ans. $1140.

3. What is the market value of 35 shares of New York Central Railroad stock, at 15% below par?

Ans. $2975.

4. What must be paid for 48 shares of Panama Railroad stock, at a premium of 51%, if the par value is $150 per share, brokerage %? Ans. $7632.

5. What will $5364 worth of stock in copper mines cost, at 9% above par, brokerage 1%? Ans. $5853.465.

6. What is the market value of 175 shares of stock in the Suffolk Bank, at 3% premium? Ans. $17631.25.

7. A man purchased $6275 worth of stock in the Pennsylvania Coal Company, at par, and sold the same at a discount of 12%. What was his loss? Ans. $753.

8. What must be paid for 125 shares of stock, at 44% premium, the par value being $1000 per share, brokerage %? Ans. $131250. 9. I bought 42 shares of Illinois Central Railroad stock, at 14% discount, and sold the same at a premium of 121%. What did I gain? Ans. $1113.

264. To find how much stock can be purchased for a given sum.

1. How many shares of bank stock, at 25% premium, can be bought for $5010, brokerage %?

=

OPERATION.

SOLUTION. Since the stock is at a $5010 ÷ $1.2525 premium of 25%, $1 worth of stock with brokerage will cost $1.25, and as many dollars' worth can be bought for $5010 as $1.25 is contained times in $5010, which is $4000 worth.

$4000 =40 shares, Ans.

RULE.-Divide the given sum by the cost of $1 of stock, and the quotient will be the nominal amount of stock purchased.

2. I invested $6187.50, in Ocean Telegraph stock, at 10% discount. How much stock did I purchase?

Ans. $6875. 3. How many shares of railroad stock, at 5% premium, can be purchased for $6300? Ans. 60 shares. 4. I sent my agent $53500 to be invested in Illinois Central Railroad stock, which was selling at 7% premium. What amount did he purchase? Ans. $50000.

5. I sold 50 shares of stock in a Pittsburgh ferry company, at 8% discount, and received $1150. What is the par value of 1 share?

Ans. $25.