Most Viewed Automatic Re-investment Of Dividends
Canals And Docks
American Railways
Bonuses
Banks
British Government Funds
Foreign Government Stocks
Borrowers
Colonial Government Securities
Dividends
Least Viewed
Insurance Companies
Surrenders
The Stock Exchange
Loans - The Interest On Which Is Guaran-teed By The British Government
Mortgages
Loans To Corporations And Counties Of The United Kingdom
Terminable Annuities
Table Of Interest On Investments Sample
Railways
Government Annuities
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Stocks And Shares
The stock of an institution or company is a
fixed sum forming the capital upon which the
concern is carried on, or it is the fixed sum bor-
rowed for certain purposes. Any quantity of
stock may be purchased, but shares, which
represent the capital of a company, can only be
purchased in whole numbers.
The nominal or face value of stocks and
shares by no means necessarily represents their
market value; in fact it is the exception that
they should do so. The market price is con-
tinually fluctuating. Thus, if the price of a
given stock is quoted in the lists and news-
papers at 110, it means that for every £100 of
such stock £10 additional has to be paid, and
the stock is said to be at 10 premium. If, on
the other hand, it is quoted at 90, it means that
£100 of such stock can be purchased for £90,
and the stock is said to stand at a discount of
10. The interest in either case is of course
calculated on the face value, that is, £100.
This applies to all kinds of stock on the same
principle, the prices varying according to the
esteem in which they are held, or, in other
words, the credit they have with the moneyed
world.
The shares of companies, which are only
purchasable in whole numbers, are of various
denominations, or face values; and again these
face values by no means represent the market
value. Shares of £5 each (nominal value) may
be quoted as selling at 6, which would be 1 pre-
mium, but the dividend or interest would be
calculated on £5. On the other hand, a £5
share quoted at 4 would be 1 discount, but the
dividend or interest would still be calculated on
the face value of £5.
In very many cases the whole of the nominal
value of a share is not called up, i.e., is not re-
quired to be immediately paid. Thus a £5 share
may have only £3 paid upon it, leaving a lia-
bility of £2, which the holder may at any time
be called upon to pay, whether convenient or
not. This should always be borne in mind when
purchasing shares of any kind, as the neglect of
this precaution has often involved holders in
serious difficulties, from being called upon to
pay up when least able to do so.
The dividend on shares of this kind is calcu-
lated only on the amount paid up.
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