ABSTRACT
Investments of loan-capital are usually made by means of written instruments, known as debentures or bonds. In Prof. Frederick A. Cleveland’s “Funds and their Uses” will be found further particulars as to the various descriptions of bonds and similar securities. Bonds very frequently are bought and sold at a different price from par. This has its effect on the income derived from the investment. In the case of a bond sold below par, the cash-rate being less than the income-rate, the same procedure is followed for finding the present worth of $5, but the result, $128.6488, is subtracted from the par, giving $871.3512 as the value of a 5% bond earning 6% per annum. In buying bonds, there is usually a stipulation that the price should be so many per cent. “and interest,” otherwise the price named is understood to be “flat.” The interest dates may not always be the most convenient epochs for periodical valuation.
