Ray's New Practical Arithmetic · Arts. 176–178 · Unit 16: Stock Transactions
83. Stocks, brokerage, assessments and dividends
Goal: Your child knows what shares, bonds, par value and brokerage are, and computes brokerage and dividends on the par value.
You'll need
- Paper and pencil, or a slate or small whiteboard
What's in the book
Page 213 defines Stock Transactions (Art. 176). Page 214 gives par value and Brokerage (Art. 177) with problems. Page 215 covers Assessments and Dividends (Art. 178) with problems.
The lesson, step by step
Warm-up
Ask: If a company is owned by 100 people in equal shares and makes $500 to share out, what does each get?
The idea
Stock is capital in the form of transferable shares.
A share is usually $100.
A bond is a written promise, under seal, to pay a certain sum of money at a specified time.
The par value of stocks and bonds is the value given on the face of them.
Brokerage and dividends
Brokerage is the sum paid the broker for transacting the business, and is calculated on the par value.
A dividend is a sum of money paid to the stockholders.
An assessment is a sum of money paid by the stockholders.
So brokerage, dividends and assessments are all per cents of the par value: $100 a share.
Work the book's examples
I own 35 shares of bank stock; if the bank declare a dividend of 4%, what will I receive?
35 shares × $100 = $3500 par; 4% of $3500 = $140.
Brokerage example: 75 shares, brokerage ¼%. Par is $7500; ¼% of it is $18.75.
Guided practice
Do these together:
The brokerage for buying 50 shares of Chicago and Rock Island stock was $6.25: what was the per cent?
A mining company declares a dividend of 15%: what does Mr. Jones receive who owns 80 shares of stock?
Independent practice and check
Your child works the remaining problems on pages 214–215. The book prints the answer at the end of each problem line. Have your child cover the answers with a strip of paper, work the problem, then slide the strip down to check.
Mental-math wrap-up
Aloud: 10 shares, 6% dividend; 200 shares, brokerage ⅛%; 60 shares, 5% stock dividend, how many shares then?
Tip
Old business note: the railroads named here (New York Central, Chicago and Rock Island, Milwaukee and St. Paul) were real companies traded in the 1870s. Brokerage of ⅛% or ¼% was the usual charge then.