193. The price of stock, when not an exact number of pounds, is expressed in pounds and a fraction of a pound-the denominator of the fraction being always 2, 4, or 8; and the £ (for "pounds ") being dispensed with.

66

Thus, if the prices realized, in the course of a day, by £100 of Consols were £91, £91, and £91, respectively, the fact would be announced in this way: Consols...91.' Three-per-cent. stock fetched its highest price, 107, in June, 1737; and its lowest price, 471, in August, 1798. Now, the price usually ranges from 90 to 96.

A

194. Purchases and sales of stock are effected through a class of persons called Stockbrokers, who are licensed by the Lords of the Treasury. stockbroker's fee is per cent, that is, 2s. 6d. for every 100 of stock which he either buys or sells. So that when a transfer of stock takes place, the buyer pays per cent. more, and the seller receives per cent. less, than the quoted price.

When, for instance, the quoted price is 91, 100 of stock costs the buyer £91}+£3=£91ğ, and realizes to the seller only £91}-£}=£913.

195. In London, a person who buys stock becomes entitled to any interest that may be due on it at the time of purchase-such interest being included in the quoted price. In Dublin, however, the quoted price does not include the interest, for which a separate charge is made. In this circumstance-considered in connexion with the fact that the half-year's dividend is invariably paid to the person actually in possession of the stock on dividend-day-we have an explanation of two apparent anomalies, namely: (a) that the Funds are usually a shade higher in London than in Dublin; and (b) that, in London, but not in Dublin, the price of stock (in the absence of disturbing influences) becomes somewhat lower immediately after payment of a dividend, and then

gradually advances as the next dividend-day approaches.

196. When a person buys stock, and afterwards sells it, he generally gains or loses by the transaction, owing to the almost incessant fluctuations. in the price.

*

This circumstance, as may be supposed, gives rise to a vast deal of speculation. When, for instance, 100 of stock is bought at 93 and sold at 95, a gain of 1 is realized-the difference between £933, the price actually paid, and £947, the price actually received. On the other hand, when £100 of stock is bought at 944 and sold at 924, a loss of £2 is sustained the difference between £945, the price actually paid, and £921, the price actually received.

197. Even when the quoted price is exactly the same on the day of sale as on the day of purchase, a loss of 58. is sustained on every £100 of stock dealt in.*

Thus, if the quoted price upon both occasions were 923, the price actually paid for £100 of stock would be £92, whilst the price actually received would be £921.

Amongst Stockjobbers-as mere speculators in the Funds are called a common practice is this: A undertakes to sell, and B engages to buy, £1,000 (say) of stock, on a certain future day, at the price at which the stock is quoted on the day of the contract-94, for example. A has really no stock to sell; but he believes that, on or before the day agreed upon, the Funds will have fallen to 92 or 91, and that he will thus have an opportunity of "making money," by purchasing £1,000 of stock from a third person, at 92 or 91, and transferring it to B at 94. On the other hand, B enters into the engagement in the expectation that the Funds will have risen to 95 or 96 on or before the appointed day, and that, accordingly, he will be able to make money by selling to somebody else, at 95 or 96, the stock which A is to transfer to him (B) at 94.

On the STOCK EXCHANGE,† persons who enter into such bar

* Any interest received in the interval being, of course, left out of consideration.

†The place where stockbrokers meet for the transaction of business is called the Stock Exchange, but is more commonly known by the shorter name 'Change.

Р

gains "time" bargains, as they are termed are known as Bears and Bulls: a "Bear" being a person who, like A, engages to sell stock, in expectation of a fall in the price; and a "Bull" being a person who, like B, undertakes to buy, in anticipation of a rise. It is hardly necessary to observe that a contract between a Bear and a Bull is neither more nor less than a wager as to what the price of a certain quantity of stock will be at a future time-a wager, however, differing from ordinary ones in this, that the amount is undetermined until the time for payment arrives.

Stockjobbing transactions are settled monthly, upon a day fixed by the stockbrokers, and known as "Account-day." Dealings in stock which is not to be "delivered" until Accountday are spoken of as "For the Account." All other dealings are "For Present Delivery." As a general rule, the transactions of stockjobbers give rise to no actual transfer of stock; the Bear merely paying the Bull, or receiving from him, (as the case may be,) the difference between the values of the stock on the day of the contract and on Account-day. The amounts of such differences may be regarded as debts of honour," their payment not being enforceable by law; but a defaulter is severely punished by being stigmatized as a Lame Duck, and being prevented from ever afterwards acting the part of either Bear or Bull.

66

198. As a financial term, "stock" does not necessarily mean Government stock-being applied also to the capital of a commercial company. BANK stock, RAILWAY stock, &c. are illustrations of this: such stock usually consists of a number of SHARES, the holders of which are called shareholders.

Thus, when a number of capitalists, about to establish a bank or construct a railway, find that (say) £500,000 will be necessary, they subscribe the amount in 5,000 shares of £100 each, or in 10,000 shares of £50 each, or in 50,000 shares of £10 each, &c.; one person taking, perhaps, 100 shares, another 50, another 20, another 5, and so on. Sometimes the "promoters"i.e., the projectors of the speculation contribute only a portion of the required capital, and invite the public to contribute the remainder.

When "allotted" a number of shares in a new undertaking, a person usually pays, at the time, only an instalment of the amount for which he becomes responsible; other instalments being subsequently paid, according as "calls" are made by the directors. In some instances, however, it is found that the full

amount is not required for the purposes of the undertaking; and thus it is that the subscribed capital of a company is sometimes a good deal in excess of the paid-up capital. If, for example, the stock of a company consisted (nominally) of 5,000 shares of 100 each, and the sum paid on each share were £80, the "subscribed" capital would be (5,000 × 100==) £500,000, whilst the "paid-up" capital would be only (5,000 × 80=) £400,000.

199. As to their liabilities, some companies are LIMITED, and some UNLIMITED. If a "limited-liability" company failed, the shareholders would not be legally responsible for more than their respective portions of the subscribed capital; but should an "unlimited" company become insolvent, the shareholders would all be liable-collectively and individually-for the full amount of the debts. A limitedliability company is known by its having the word Limited" after its name: thus-"The Munster Bank, Limited."

46

200. Railway and other shares are very extensively dealt in, and are quoted at, above, or below par-according to the dividends they are likely to realize. When buying or selling shares, a stockbroker charges, in most cases, a fee of per cent. i.e., 58. on every £100.*

[In the following examples-which, it will be seen, belong to Proportion-the price mentioned, as that of £100 of stock, is supposed in every instance to be the price actually paid or received; in other words, the "quoted" price plus or minus (as the case may be) the fee charged by the broker:-]

"Notwithstanding the low interest paid by the Funds, it is by far the best investment that any ordinary person can select for the money which he does not employ in his own business. Many investments promise a higher rate of interest, but they are suitable only for persons with large capital, who make it their special business to know what investments offer sufficient security. But the man who has a few hundred, or even a few thousand pounds to dispose of, if he selects any other investment will generally find in the end that, owing to the failure of public companies, law expenses, bad debts, and other losses, he would have been much richer if he had invested his money in the Funds."-Judge Longfield.

EXAMPLE I. How much stock can be bought, at 89%, for £750?

Worded somewhat differently, the question is this: If £895 (cash) will purchase £100 of stock, what quantity of stock will £750 (cash) purchase? The proportion is—

(Cash.) (Cash.) (Stock.) (Stock.)

£895 : £750 :: £100 : a

a=(750x 100÷÷895=)£836 16s. 5d. nearly.

EXAMPLE II.-If £365 of stock were sold at 911, what would the seller receive in ready-money?

In other words: If £100 of stock would realize £911 (cash), how much (cash) would £365 of stock realize? The proportion

is

(Stock.) (Stock.) (Cash.) (Cash.)

£100 £365 : : £911: a
a=(365× 911÷100=) £332 12s. Id.

EXAMPLE III.-What per-centage does a person receive on money which he invests in Consols at 90?

On £90 (cash) he receives the interest of £100 of Consols— that is, £3 a year; therefore, on £100 (cash) the yearly interest is the fourth term of the proportion

(Prin.) (Prin.) (Int.) (Int.)

£90 : £100 :: £3 : a

a= =(100 × 3÷90=) £33, or £3 6s. 8d.

EXAMPLE IV.-Which is the more profitable investment (other circumstances being the same)-stock bought at 230, and paying 10 per cent.;* or stock bought at 120, and paying 6 per cent. ?*

When 10-per-cent stock is bought at 230, the purchaser receives 10 a-year (interest) on £230 (principal). On £100 (principal), therefore, he receives £45 a-year (interest), or a little more than £43:

Again: When 6-per-cent. stock is bought at 120, the pur

* That is, on the paid-up capital.