Last year there was a profit of $10000 to be divided. What dividend was declared? What was Miss Seeber's share ! WORK AND EXPLANATION: Query? $10000 is what % of $100000? $10000 is, or 10% of $100000. Hence, the dividend declared was 10%. 1 share yields $10. 20 shares yield 20 × $10 = $200. PROBLEM: What will 15 shares of New York, New Haven, and Hartford R. R. stock cost me at 168 ? WORK AND EXPLANATION: At 168, one share costs $168. 15 shares cost 15 × $168, or $2520. NOTE.-Explain to the pupil that the quotation for any stock represents its market value. It is usually above or below par. Here it was 68 above par. This means that each 100dollar share is selling in the market for $168. PROBLEM: Michigan Central R. R. stock is quoted at 98. Its average dividends for some years have been 5%. How much must I invest to get an income of $450 from it WORK AND EXPLANATION: 1 share at 5% yields $5. 450 To yield $450 it takes or 90 shares. 90 shares at 98 cost 90 x $98 = $8820. PROBLEM: J. Pickard bought ten shares of Ill. Cent. R. R. stock at 96. What does he get when a dividend of 6% is declared? What per cent is that on his investment! A. H.-24 pay for it to bring me 6% on my investment ! WORK AND EXPLANATION: 1 share yields $8. Query? $8 is 6% of what number? ... I can pay $1333 per share, or buy when it is quoted at 133. NOTE. Should this corporation ever close up, I would only get par value, or $100 a share, for this stock. Consequently, I must consider that element in buying. PROBLEM: After a bank has declared a scrip dividend of 5%, I hold 42 shares. The par value is $100. How many shares had I at first! WORK AND EXPLANATION: The par value of 42 shares is $4200. The dividend was 5% of par value of my original shares. Then 105% of par value of my original shares $4200. = = 100% of par value of original shares is 8 of $4200 $4000. NOTE.- Explain that a scrip dividend is the name given to a dividend paid in new shares. When a company wishes to increase its capital stock it sometimes uses the profits in that way. Instead of declaring a cash dividend, it issues new shares of stock to each stockholder to the amount of what his share of a cash dividend would be. STOCK QUOTATIONS. The stock quotations in the daily newspapers on Dec. 10, 1902 were: National Biscuit Co., preferred.. 102 Diamond Match..... 138 NOTE. These quotations represent the value of each 100dollar share of stock. For instance, a 100-dollar share of Diamond Match stock was worth in the market $138 on Dec. 10, 1902. The pupil will notice in this table that some of the stocks are preferred. This necessitates an explanation of the terms, common stock and preferred stock. Common stock is the ordinary stock of a corporation, which has no preference, in the payment of dividends, over any other. |