Rule.—Multiply the price per share, by the number of shares.
Example: Find cost of 65 shares of bank stock, at $107 per share, or 7% premium. Also of 48 shares of railroad stock, at $871⁄2 per share, or 121⁄2% discount.
(1) 65 × 107 = 6955. Ans. $6955.
(2) 48 × 871⁄2 = 4200. Ans. $4200.
2. To find what rate per cent is realized by investing in stocks or bonds when above or below par.
Rule.—Annex two ciphers to the fixed rate per cent, and divide by the cost per share. Or by proportion: As the cost per share is to the fixed rate, so is 100 to the required rate.
Example: Mr. Warren bought ten shares of Illinois Central Railroad stock at 96. What does he get when a dividend of 6% is declared? What per cent is that on his investment?
Work and Explanation:
(1) 1 share at 6% yields $6
(1) 10 shares yield 10 × $6 = $60.
(2) Each share at 96 costs $96.
(2) Each share yields $6.
Query? $6 is what per cent of $96?
Query?$6 is 6⁄96 of 100%, or 61⁄4%.
Query?∴ the investment yields 61⁄4%.
3. To find which is the more profitable investment.
Rule.—Find the rate per cent that each investment yields, by rule, under item 2; then compare rates.