23. If the capital stock of a corporation is $500,000, divided into shares of $50 par, how many shares are there of this stock? How many shares of it do ten men own if their combined holdings are 51% of the stock?

24. If a company with a capital stock of $75,000 distributes $3000 in dividends, how much does it pay on each share of its stock, par value $50? What rate of dividend does it pay on its capital stock?

25. Mr. Carter receives every three months from the Union Pacific Railroad Company a check for $50 as his dividend at 21% per quarter on his holdings of the stock of this railroad. The par value of the stock is $100. How many shares does he own?

26. When a company with a capital of $500,000 declares a dividend of 6%, how much money is to be distributed as a dividend among its stockholders? What dividend is paid on each share if the par value of the stock is $50? What is Mr. Bailey's dividend on 75 shares of this stock?

27. Mr. Baker's income from railroad stock is $240 a year. It pays an annual dividend of $5 per share. How many shares does he own? What will he receive for this stock if he sells it at 961, brokerage 15¢ per share?

28. If a mining company with a capital of $1,000,000 pays in one year two dividends of 5¢ each per share, and two dividends of 10¢ each per share, how much dividend does it pay in that year, the par value of its stock being $5 per share? The dividends for this year are what per cent of the capital stock?

29. Mr. Clark wishes to invest sufficient money in 6% stock, par value $50, to provide an annual income of $600 for a dependent. If the market value of the stock is 483, how much must he invest, brokerage 15¢ per share?

Bonds. Governments, national, state, and local, as well as

private corporations need to borrow money. For example, to help to meet the expenses of the World War, the United States sold Liberty Loan Bonds and Victory Notes, receiving for them more than $21,000,000,000. Any purchaser of these bonds has merely loaned his money to the government. As evidence of this loan he received one or more of the bonds, which are the government's promise to pay the amount specified therein together with interest at a stated rate every six months until the loans are repaid.

Meaning of a Bond. A bond is a written obligation of a government or a corporation to pay a specified sum of money at a certain time together with interest at regular intervals at a fixed rate per annum. Bonds issued by private corporations are usually secured by a mortgage, which is an agreement by which the holder of the bonds may sell the property of the

corporation if the interest on the bonds is not paid when due,

or if they are not paid at maturity

A Coupon Bond. A coupon bond is a bond made payable to the bearer and, when sold, is delivered to the purchaser without indorsement or assignment being necessary. It has attached to it interest coupons payable to the bearer at specified times. When interest is due, a coupon is cut off and presented to a bank for payment.

One of the Coupons (Enlarged) from the Bond on page 199

A Registered Bond. A registered bond is a bond issued without interest coupons, filled out in the name of the registered owner, made payable to him or his assigns, and registered in his name.

Interest on registered bonds is sent to the registered owner or to his attorney as it becomes due.

Bonds may sell above or below their face value. They are usually named from the rate of interest they pay and the year in which they are payable. Thus, "U. S. 4s reg., 1925" means U. S. Government bonds registered, bearing 4% interest and payable in 1925.

Commission. The commission charged by a broker for buying or selling bonds is usually 3% of the face value of the bonds. What to Consider in Purchasing Bonds. It is estimated that more than $500,000,000 is lost each year by investments in worthless stocks and bonds of corporations which agents and promoters

seem to have little trouble in selling to the public. Before purchasing bonds, one should be reasonably sure that:

(1) The property which secures the bond is ample to protect, its face value, even under adverse business conditions. (2) The character of the business is dependable, its management efficient, and its possibilities such that the regular payment of interest is reasonably assured.

(3) It is marketable. Some bonds may represent good values but be so little known that their prospective purchasers are limited. Bonds listed on leading stock exchanges are usually more readily sold than those not so listed..

As the market value of stocks and bonds varies greatly, due to several causes, and as there are so many worthless stocks offered for sale, inexperienced persons, and others as well, should buy these securities from none but reliable brokers or bankers; they should never buy those which promise returns considerably in excess of prevailing rates of interest.

Stocks and Bonds Compared as Investments. The stockholders of a corporation are the owners of it, while the bondholders are creditors of the corporation; hence interest on bonds, at a fixed rate, must be paid before any dividend can be declared on the stock, which is only done in case the net earnings justify the payment of a dividend. This is the main reason why bonds of a corporation are a safer investment than the stocks of the same corporation.

INVESTMENTS IN BONDS

1. Andrew bought a $100 Liberty Loan Bond, the interest on which is due June 15 and Dec. 15 of each year until the bond is due, the interest rate being 31% per annum. How much interest does he receive June 15? Dec. 15? His bond is a coupon bond; what must he do to get the interest?

2. Andrew bought the bond mentioned in problem 1, June 15, 1917, when it was issued. It is a 15-30 year bond (which means that the government may redeem it in fifteen years after it was issued, but that its date of maturity is thirty years after June 15, 1917). On what date may the government redeem the bond? On what date is it due?

3. If Andrew holds this bond for 15 years from the date of purchase, how much interest will he have received on it by that time? How much if he holds it to the date of maturity?

4. What interest does the United States government pay in one year on First Liberty Loan Bonds amounting to $1,989,455,550, the interest rate being 31% per annum?

5. April 1, 1920, the Pennsylvania Railroad Company sold $50,000,000 of ten-year 7% bonds. When will these bonds be due?

6. The interest on the bonds mentioned in problem 5 is payable April 1 and October 1 each year until the bonds are paid. How much interest must the Pennsylvania Railroad Company pay on these bonds each 6 months? how much in 10 years?

7. Find out from the daily market reports of sales of bonds, the market quotation on the bonds mentioned in problem 5, and what a purchaser of $10,000 of these bonds would have to pay for this amount today, including brokerage.

8. June 1, 1920, the Hershey Chocolate Corporation issued $10,000,000 of 7% ten-year coupon bonds in denominations of $1000, $500, and $100, interest payable June 1 and December 1. Mrs. Hartman bought a $1000 bond of this issue at 97. What did she pay for it including brokerage? What semiannual interest does she receive on the bond?

9. What is the semiannual interest on the whole issue of the bonds mentioned in problem 8? What semiannual interest does the holder of a $500 and two $100 bonds of this issue receive?