Explanation. The exchange value of $1, at 1% premium, is $1.005. With $275 a draft can be purchased for as many dollars as there are $ 1.005's in $ 275. Ans. $273.63. 4. What is the face of a draft that may be bought for $500 at a discount of 1% ? Ans. $507.61. 5. The net proceeds of a lot of cheese sold for my correspondent in New York are $1872; with this sum I buy for remittance a draft on J. Watson & Co. of New York at a premium of 1%; what is the face of the draft? Ans. $1,870.13. FOREIGN EXCHANGE. 498. The method of computing foreign exchange is the same as that of computing inland exchange, except that the currency of one country is changed to that of the other. NOTE. If a person wishes to remit a given sum to any foreign country, a bill on London or Paris is almost always convenient alike to creditor and debtor; hence exchange between the United States and foreign countries is generally effected through London or Paris. NOTE I.-The guinea of 21s., and the crown of 5 s., are also used. The coin which represents the £ value is called a sovereign. NOTE II. The value of £1 sterling, which is the English sovereign, is $4.44 in the old coin of the United States. But Congress has from time to time reduced the weight and purity of United States coins, making their value as metals less than their value as coins, that they might not be used for transportation or the arts, and has established the legal value of the pound sterling at $4.84. The commercial value of the pound varies as it is in greater or less demand. The basis of Exchange, however, is the old or nominal value of the pound ($4.44), compared with which the pound at $4.84 is at 81%% premium. Hence, for example, when exchange on England is quoted at 10% premium, it is about 1% premium upon the legal value. 500. FRENCH CURRENCY. 100 centimes = 1 franc, marked fr. NOTE. -1 franc = 18 cents. 501. EXAMPLES IN REDUCTION OF CURRENCY AND EXCHANGE. NOTE I. — In the following examples, by United States money is meant United States gold coin, unless it is otherwise specified. 6. What is the nominal value of £30 English money expressed in United States money? 7. What is the legal value of the above? (Art. 499, Note II.) 8. What is the value of the above at 94% advance upon the nominal value? $40 X 30 X 1.095 = 9 9. What is the value of £ 40 at 9% advance? $146, Ans. 10. What is the cost in Philadelphia of a bill on London for £50 5 s. 9 d. at 10% premium ? NOTE II. — £ 50 5 s. 9 d. equals £ 50.2875 (Art. 342), which may be changed to United States money as above. Ans. $245.85. = ABBREVIATED METHOD OF REDUCTION. - £1 $40, and £1 equals 40 sixpences; then 40 sixpences equal $40, and 1 sixpence equals $; hence 9 sixpences equal $1. Therefore, To change English money to United States money, Change the given sum to sixpences, and divide the number of sixpences by 9. The quotient will express the nominal value of the given sum in dollars of United States money. To obtain the real value add the premium. NOTE III. To change pounds, shillings, and pence to sixpences, multiply the number of the pounds by 40, the number of the shillings by 2, and divide the number of the pence by 6. This can generally be done without the aid of the slate. Example 10 would be performed by the above method as follows: — £50 5 s. 9 d. = = $245.85. Ans. 2011.5 sixpences. 2011 5 × 1.10 9 EXAMPLES. 11. What is the cost of £40 15 s. at 9% premium? Ans. $197.41. 12. What is the cost of £1000 at 94% premium? Ans. $4,877.78. 13. Bought goods in Liverpool to the amount of £167 7 s.; what must I pay in U. S. paper currency for a draft of the same at 10% advance, gold being at a premium of 35%? £167 7 s. = 6694 sixpences. 669 X 1.10 X 1.35 = $1,104.51, Ans. 14. Bought goods in London to the amount of £725 12 s.; what must I pay in U. S. paper currency for a draft of the same at 91% advance, gold being at a premium of 33% ? Ans. $4,696.57. 15. What shall I pay in U. S. paper money for the following draft at 93% advance, gold being at a premium of 30%? Exchange, £ 100 Stg. No. 10. Boston, May 17, 1869. Sixty days after Sight of this first of Exchange, second and third unpaid, pay to Brown, Smith, & Co. or Order, One Hundred Pounds Sterling, Value received, and charge the same to account of Your obdt. servts., To Messrs. Baring Brothers & Co., Dupee, Beck & Sayles. London. NOTE. To provide against accident in the transmission of a draft, it is customary to send two, at least, of the same tenor and date, by different modes of conveyance or at different times, the payment of either one of which cancels the others. 16. What amount of English money at 10% advance can be bought for $675 ? $675 X 9 40 X 1.10 OPERATION. = £138 1 s. 4 d. can be bought for this sum as there 4 d. Explanation.- $ 675 changed to pounds at par equals ££75x2. As many pounds at 10% advance are 1.10's in 75x2, or £138 1s. Ans. £138 1s. 4 d. 17. What amount of English money at 94% advance can be bought for $328.50 ? Ans. £67 10 s. 18. There was shipped to Liverpool from New York in one week $6870205 in specie; what amount of English currency, at 91% premium, could be bought with it? Ans. £1,411,685 19 s. 2 d.+ 19. For $500 in U. S. paper money, what amount of English money can be bought at 9% advance, gold being at a premium of 28%? Ans. £80 12s. 8d.+ 20. What is the cost of a draft on Paris for 500 francs, exchange being 5.2 francs per dollar? Ans. $96.15. 21. What is the cost in paper currency of a set of exchange on Paris for 200 francs, at 5.21 fr. per dollar in coin, gold being at a premium of 25% ? Ans. $47.98. 22. The shares in the Panama Railroad were originally 500 francs each; what was their value in United States paper money, exchange being 4.25 fr. per dollar in coin? 23. What is the amount of a draft on Paris that I can purchase for $200 U. S. paper money, exchange being 5.22 fr. per gold dollar, and gold being at a premium of 20% ? Ans. 870 fr. BONDS. 502. Governments and corporations sometimes borrow money, giving, as evidence of the loans, certificates payable at or within some definite time, with interest at stated periods. Such certificates and notes are called bonds. NOTE I. Bonds sometimes have interest tickets attached, promising to the bearer certain sums of interest as they become due upon the bonds. The interest tickets are called coupons. NOTE II. - When the interest specified on a coupon is paid, the coupon is cut off and retained as a receipt. The principles already illustrated in percentage apply to operations upon bonds. UNITED STATES BONDS. 503. The extraordinary expenses of the government of the United States for the past few years have been met in part by the sale of bonds. - NOTE.. U. S. bonds are issued in denominations of $50, $100, $500, $1000, $5000, and $10000. The following is a list of the principal UNITED STATES BONDS NOT REDEEMED IN 1869. 1. When gold is at 35% premium, what is my semi-annual income in currency from 12 U. S. 6% bonds of $1000 each? OPERATION. - $12000 X .03 X 1.35 $486. Ans. $486. 2. U. S. 6%'s are quoted to-day at 119; what must I pay for 6 bonds of $100 each, brokerage being 1% on the amount invested? NOTE.-By 119 is meant 1191% or 191% premium. Ans. $ 716.54. 3. What is the value in currency of the semi-annual interest on the above bonds, gold being quoted at 128 ? Ans. $ 23.04. 4. What per cent upon my investment do I make semi-annually by buying a U. S. 5-20 bond at 110, gold being at a premium of 32%? Ans. 38%. 5. The premium on gold being 32%, which will yield the greater per cent of income, money invested in U. S. 10-40's at 108, or in R. R. stock purchased at 12% advance, which pays a semi-annual dividend of 4%? Ans. R. R. stock; R. R. paying semi-annually 34%; bonds 31% 6. Which is the better investment, U. S. 5%'s at 112, or U. S. 6%'s at 115? Ans. 6%'s. 6%'s yield 21% semi-annually 5%'s yield 28% in gold. 7. How many $100 U. S. bonds and what money will remain ? at 115 can I purchase with $1978, Ans. 17 bonds; $ 23 remain. 8. How much money must be invested in U. S. 5-20's at 114, to yield a semi-annual income of $ 400 in gold? Ans. $15,200. |