Ray's New Higher Arithmetic · Arts. 248–253 · Unit 15: Percentage: Profit and Loss, Stocks and Bonds
67. Stocks and bonds
Goal: Your student explains company, corporation, stock, share, bond, dividend and assessment, and solves the four cases of dividend and assessment problems.
You'll need
- The book
- A slate, small whiteboard or scrap paper
- A notebook and pencil
What's in the book
Definitions (company, corporation, charter, stock, shares, scrip, stocks, bond, assessment, dividend), the four cases matched to percentage (stock is the base), and examples for each case. Most answers are printed; the case ends at the top of page 208, just above Premium and Discount.
The lesson, step by step
Warm-up
Ask: If you and three friends each put $25 into a lemonade stand, who owns it? How should the profit be shared?
The idea
Read:
A Company is an association of persons united for the transaction of business.
A company is called a Corporation when authorized by law to transact business as one person.
Stock is the capital of the corporation invested in business.
Stock is divided into Shares, usually of $50 or $100 each.
Bonds, dividends, assessments
Read:
A Bond is a written or printed obligation, under seal, securing the payment of a certain sum of money.
A Dividend is a sum of money to be paid to the stockholders in proportion to their amounts of stock.
An Assessment is a sum of money required of the stockholders in proportion to their amounts of stock.
In 1880, stockholders often paid for their shares in installments, called in by assessments.
The four cases
Read:
The stock corresponds to the Base; the dividend or assessment, to the Percentage
Case I: stock × rate = dividend. Case II: dividend ÷ stock = rate. Case III: dividend ÷ rate = stock. Case IV: stock plus dividend (or minus assessment) ÷ (1 ± rate) = stock.
Guided practice
Together:
what do I get on 50 shares ($100 each)?
(The Cincinnati Gas Co. pays 18%: $900.)
A telegraph company, with a capital of $75000, declares a dividend of 7%, and has $6500 surplus: what has it earned?
($5250 + $6500 = $11750.)
Independent practice
Your student works the examples for all four cases. Case II, Examples 2 to 4 are faint in the scan; their answers are below.
Wrap-up
Ask: Does a stockholder get a dividend if the company earns nothing? (No: the book says dividends come out of net earnings.)
Afterwards
Two sittings: definitions and Case I, then Cases II to IV.
Answers to the book's problems
Case II: 2) $16384.50 ÷ $225000 = .07282, a dividend of 7.282%. 3) ($256484 − $79383) ÷ $3650000 = $177101 ÷ $3650000 = 4.852+%. 4) 500 shares × $100 = $50000; $250 ÷ $50000 = ½%.
Worked out for this site from the scan. If a number in your copy differs, trust the book.