Wall Street speaks a language all its own. At first hearing, it may be confusing, even meaningless, to the innocent in­vestor whose only wish is to buy or sell some stock. Yet, like the shorthand speech of sports, jazz, the carnival, and the teen-ager, the words of Wall Street are simply a dis­tillation of complicated activities and procedures into brief and convenient terms.

The glossary which follows is an effort to define and explain a number of the expressions commonly encountered in a broker's office or at a stock exchange.* They have their source in many places and many points in time. Some, such as the name of Wall Street itself, go back 300 years or more—in this case to the time when there literally was a wall across lower Manhattan to keep the cows in and the Indians out. Many are colorful and succinct. Certain of them are highly technical; even the experts would disagree on the precise shade of meaning of some of them.

Read them carefully. Try to absorb them. You should be fairly familiar with them before venturing very far into the investment field.

Accrued Interest:Interest accumulated on a bond since the last interest payment was made. The buyer of the bond pays the market price plus accrued interest. Exceptions include bonds which are in default and income bonds.

Arbitrage:A technique employed to take advantage of dif­ferences in price. If, for example, XYZ stock can be bought in New York for $10 a share and sold in London at $10.50, an arbitrageur may simultaneously purchase XYZ stock here and sell the same amount in London, making a profit of 50 cents a share, less expenses. Arbitrage may also involve the purchase of rights to subscribe to a security, or the pur­chase of a convertible security—and the sale, simultaneously or at about the same time, of the security obtainable through exercise of the rights or of the security obtainable through conversion.

*The Language of Investing, reprinted by permission of the New York Stock Exchange.

Assets:Everything a corporation owns or that is due it. Cash, investments, money owed to it, materials and inven­tories, which are called current assets; buildings and mach­inery, which are known as fixed assets; and patents and good will, called intangible assets.

At the Market:An order to buy or sell a security at the best possible price when the order reaches the trading floor.

Averages: Various means of measuring the trend of securities prices of the New York Stock Exchange, the most popular of which is the Dow-Jones average of 30 industrial stocks. Numerous formulas—some very elaborate—have been de­vised to compensate for stock splits and stock dividends and thus give continuity to the average. In the case of the Dow-Jones industrial average, the prices of the 30 stocks are totaled and then divided by a divisor which is intended to compen­sate for past stock splits and dividends and which is changed from time to time. As a result, point changes in the average have only the vaguest relationship to dollar price changes in stocks included in the average.

Balance Sheet: Acondensed statement showing the nature and amount of a company's assets, liabilities, and capital on a given date. In dollar amounts, the balance sheet shows what the company owned, what it owed, and the owner­ship interest in the company of its stockholders.

Bear: Someone who believes the market will decline.

Bear Market: A declining market.

Bearer Bond: A bond which does not have the owner's name registered on the books on the issuing company or on the bond, and which is payable to the holder.

Bid and Asked: Often referred to as a quotation or quote. The bid is the highest price anyone has declared that he wants to pay for a security at a given time; the asked is the lowest-price anyone will take at the same time.

Big Board: A popular term for the New York Stock Exchange.

Blue Chip: Common stock in a company known nationally for the quality and wide acceptance of its products or serv­ices, and for its ability to make money and pay dividends in good times and bad. Usually such stocks are relatively high-priced and offer relatively low yields.

Blue Sky Laws: A popular name for laws various states have enacted to protect the public against securities frauds. The term is believed to have originated when a judge ruled that a particular stock had about the same value as a patch of blue sky.

Board Room: A room for customers in a broker's office, where opening, high, low, and last prices of leading stocks are posted on a board throughout the day.

Boiler Room: Refers to high-pressure peddling over the tele­phone of stocks of dubious value. A typical boiler room is simply a room lined with desks or cubicles, each with a sales­man and telephone. The salesmen call what is known in the trade as "sucker lists."

Bond: Basically an IOU or promissory note of a corporation, usually issued in multiples of $1,000, although $100 and $500 denominations are not uncommon. A bond is evidence of a debt on which the issuing company usually promises to pay the bondholders a specified amount of interest for a speci­fied length of time, and to repay the loan on the expiration date. In every case a bond represents a debt—its holder is a creditor of the corporation, not a part owner as is the share­holder.

Book: Anotebook used by the specialist in a stock to keep a record, in strict sequence of receipt, of the buy and sell orders at specified prices which are left with him by other brokers.

Book Value:The value of stock obtained by adding all company assets (generally excluding such intangibles as good will), then deducting all debts and other liabilities, plus the liquidation price of any preferred issues. The sum arrived at is divided by the number of common stocks outstanding, and the result is book value per common share. Book value of the assets of a company or a security may have little or no significant relationship to market value.

Broken An agent, often a member of a Stock Exchange firm or an Exchange member himself, who handles the public's orders to buy and sell securities or commodities. For this service a commission is charged.

Broker's Loans:Money borrowed by brokers from banks for a variety of uses. It may be used by specialists and odd-lot dealers to help finance inventories of stocks they deal in; by brokerage firms to finance the underwriting of new issues of corporate and municipal securities; to help finance a firm's own investments; and to help finance the purchase on margin of securities for customers.

Bucket Shop:An illegal operation now almost extinct. The bucket-shop operator accepted a client's money without ever actually buying or selling securities as the client ordered. Instead, he held the money and gambled that the customer was wrong. When too many customers were right, the bucket shop closed its doors and opened a new office.

Bull:One who believes the market will rise.

BullMarket: An advancing market.

Call:See Puts and Calls.

Call Loan:A loan which may be terminated or "called" at any time by the lender or borrower. Used to finance purchases of securities.

Callable:A bond issue, all or part of which may be redeemed by the issuing corporation, under definite conditions, before maturity. The term also applies to preferred shares which may be retired by the issuing corporation.

Capital Stock:All shares representing ownership of a busi­ness, including preferred and common.

Capital Gain or Capital Loss: Profit or loss from the sale of a capital asset. A capital gain may be either short-term (six months or less) or long-term (more than six months). A short-term capital gain is taxed at the reporting individual's full income-tax rate. A long-term capital gain is taxed at a maximum of 25 per cent, depending on the reporting in­dividual's tax bracket. Up to $1,000 of net capital loss—that is, the loss resulting when an individual sells securities at a lower price than he paid for them—is deductible from the individual's taxable income during the year reported. If the capital loss is more than $1,000, as much as $1,000 annually is deductible in each of the next five years. The amount of capital loss which may be deducted is reduced by the amount of any capital gain.

Capitalization:Total amount of the various securities issued by a corporation. Capitalization may include bonds, deben­tures, preferred and common stock. Bonds and debentures are usually carried on the books of the issuing company in terms of their par or face value. Preferred and common shares may be carried in terms of par or stated value. Stated value may be an arbitrary figure decided upon by the di­rectors or may represent the amount received by the com­pany from the sale of the securities at the time of issuance.

Carrying Charge: The fee charged by a broker for carrying a customer's securities on margin.

Cash Sale: A transaction on the floor of the Stock Ex­change which calls for delivery of the securities the same day. In "regular way" trades, the seller is allowed four business days for delivery.

Certificate:The actual piece of paper which is evidence of ownership of stock in a corporation. Watermarked paper is finely engraved with delicate etchings to discourage forgery. Loss of a certificate may, at the least, cause a great deal of inconvenience—at the worst, financial loss.

Collateral:Securities or other property pledged by a borrower to secure repayment of a loan.

Collateral Trust Bond:A loan secured by collateral de­posited with a trustee. The collateral is often the stocks or bonds of companies controlled by the issuing company but may be other securities.

Commission:The broker's fee for purchasing or selling se­curities or property for a client. On the New York Stock Exchange, commissions average about one per cent of the market value of the stocks involved in a transaction and approximately one-quarter of one per cent on bonds.

Commission Broker:An agent who executes the public's orders for the purchase or sale of securities or commodities.

Common Stock:Securities which represent an ownership in­terest in a corporation. If the company has also issued pre­ferred stock, both common and preferred have ownership rights, but the preferred normally has prior claim on divi­dends and, in the event of liquidation, assets. Claims of both common and preferred stockholders are junior to claims of bondholders or other creditors of the company. The terms common stock and capital stock are often used interchange­ably when the company has no preferred stock.

Consolidated Balance Sheet:A balance sheet showing the financial condition of a corporation and its subsidiaries.

Convertible: A bond, debenture, or preferred share which may be exchanged by the owner for common stock or another security, usually of the same company, in accordance with the terms of the issue.

Corner:Buying of a stock or commodity on a scale large enough to give the buyer, or buying group, control over the price. A person who must buy that stock or commodity, for example one who is short, is forced to do business at an arbitrarily high price with those who engineered the corner.

CouponBonds: Bonds with interest coupons attached. The coupons are clipped as they come due and are presented by the holder for payment of interest.

Cover:Buy a security previously sold short.

Cumulative Preferred: Astock having a provision that if one or more dividends are omitted, the omitted dividends must be paid before dividends may be paid on the company's common stock.

CumulativeVoting: A method of voting for corporate di­rectors which enables the shareholder to multiply the number of his shares by the number of directorships being voted on and cast the total for one director or a selected group of directors. A 10-share holder normally casts 10 votes for each of, say, 12 nominees to the board of directors. He thus has 120 votes. Under the cumulative voting principle, he may do that, or he may cast 120 (10 x 12) votes for only one nominee, 60 for two, 40 for three, or any other distribution he chooses. Cumulative voting is required under the cor­porate laws of some states, and is permitted in most others.

Curb Exchange: Former name of the American Stock Ex­change, second largest exchange in the United States. The term comes from the market's origin on the streets of down­town New York.

Current Assets: Those assets of a company which are rea­sonably expected to be realized in cash, or sold, or consumed during the normal operating cycle of the business. These in­clude cash, United States Government bonds, receivables and money due usually within one year, and inventories.

Current Liabilities:Money owed and payable by a company, usually within one year.

Day Order:An order to buy or sell stock at a specified price which expires, unless executed, on the day the order is given. An investor may also specify a longer time, or state that the order is good until cancelled.

Dealer:An individual or firm in the securities business acting as a principal rather than as an agent. Typically, a dealer buys for his own account and sells to a customer from his own inventory. The dealer's profit or loss is the difference between the price he pays and the price he receives for the same security. The dealer's confirmation must disclose to his customer that he has acted as principal. The same individual or firm may function, at different times, either as broker or dealer. For example, the specialist on the floor of the New York Stock Exchange acts as a dealer when he buys or sells stock for his own account to maintain a market. He acts as a broker when he executes the orders commission brokers have left with him.

Debenture:A promissory note backed solely by the general credit of a company, and not secured by a mortgage or lien on any specific property.

Delivery:The certificate representing shares bought "regular way" on the New York Stock Exchange is normally delivered to the purchaser's broker on the fourth business day after the transaction. If a seller wants to delay delivery of the certificates, he may have his broker offer the stock "seller's option," instead of "regular way," and he may specify the number of days, from five up to 60, for delivery. A stock offered "seller's option" may command a lesser price than if offered "regular way."

Depreciation:The amount of money charged against earn­ings by a company to offset the decline in value of a plant or machine due to age, wear and tear, and obsolescence during its useful life.

Director:A person elected by shareholders, at the annual meeting, to direct company policies. The directors appoint the president, vice presidents, and all other operating officers. Directors decide, among other matters, if and when dividends shall be paid.

Discretionary Account:An account in which the customer gives the broker or someone else discretion, which may be complete or within specific limits, as to the purchase and sale of securities or commodities including selection, timing, and price to be paid or received.

Discretionary Order:With this order, the customer specifies the stock or the commodity to be bought or sold, and the amount. His agent is free to act as to time and price.

Distribution:Selling, over a period of time, of a large block of stock, without unduly depressing the market price.

Diversification:Spreading investments among different com­panies in different fields. Diversification is also offered by the securities of many individual companies because of the wide range of their activities.

Dividend:The payment designated by the Board of Directors to be distributed pro rata among the shares outstanding. On preferred shares, it is generally a fixed amount. On common shares, the dividend varies with the fortunes of the company and the amount of cash on hand, and may be omitted if business is poor or the directors determine to withhold earn­ings to invest in plant and equipment. Sometimes a company will pay a dividend out of past earnings even if it is not cur­rently operating at a profit.

Dollar Cost Averaging: A system of buying securities at regular intervals with a fixed amount of dollars invested over a considerable period of time, regardless of the prevailing prices of the securities. It is frequently used by institutional investors. Under this system, the investor acquires not 10 shares of ABC every month or every six months, but $50 worth of ABC. When ABC is selling at a low price he gets more shares than when it is selling at a high price. Over the long term, if the price trend of a stock is upward, and periodic investments are maintained in good times and bad, dollar cost averaging may be a rewarding investment tech­nique.

Dow Theory:Atheory of market analysis based upon the performance of the Dow-Jones industrial and rail stock price averages. According to this theory, the market is in a basic upward trend if one of these averages advances above a previous important high, accompanied or followed by a similar advance in the other. When the averages both dip below previous important lows, this is regarded as confirmation of a basic downward trend. The theory does not attempt to prediet how long either trend will continue, although it is widely misinterpreted as a method of forecasting future action. Whatever its merits, the theory itself is sometimes a strong factor in the market, because many people believe in it—or know that a great many others do.

Down Tick: See Up Tick.

Earnings Report:A statement—also called an income state­ment—issued by a company showing its earnings or losses over a given period. The earnings report lists the income earned, expenses, and the net result.

Equipment Trust Certificate:Atype of security, generally issued by a railroad, to pay for new equipment. Title to the equipment, such as a locomotive, is held by a trustee until the notes are paid off. An equipment trust certificate is usually secured by a first lien on the equipment.

Equity:The ownership interest of common and preferred stockholders in a company. Also refers to the excess of value of securities over the debit balance in a margin ac­count.

Exchange Acquisition:A method of filling an order to buy a large block of stock on the floor of the Stock Exchange. Under certain circumstances, a member-broker can facilitate the purchase of a block by soliciting orders to sell. All orders to sell the security are lumped together and offset with the buy order in the regular auction market. The price to the buyer may be on a net basis or on a commission basis.

Exchange Distribution:A method of disposing of large blocks of stock on the floor of the Stock Exchange. Under certain circumstances, a member-broker can facilitate the sale of a block of stock by soliciting, and getting other mem­ber-brokers to solicit, orders to buy. Individual buy orders are lumped together and crossed with the sell order in the regular auction market. A special commission is usually paid by the seller; ordinarily the buyer pays no commission.

Ex-Dividend:Without dividend. The buyer of a stock selling ex-dividend does not receive the recently declared dividend. Open buy and sell stop orders in a stock on the ex-dividend date are ordinarily reduced by the value of that dividend. Every dividend is payable on a fixed date to all shareholders re­corded on the books of the company as of a previous date of record. For example, a dividend may be declared as pay­able to holders of record on the books of the company on a given Friday. Since four business days are allowed for delivery of stock in a "regular way" transaction on the New York Stock Exchange, the Exchange would declare the stock "ex-dividend" as of the opening of the market on the preceding Tuesday. Thus anyone who bought it on and after Tuesday would not be entitled to that dividend.

Ex-Rights:Without the rights. Corporations raising additional money may do so by offering their stockholders the right to subscribe to new or additional stock, usually at a discount from the prevailing market price. The buyer of a stock selling ex-rights is not entitled to the rights.

Extra:The short form of "extra dividend." A dividend in the form of stock or cash in addition to the regular or usual dividend the company has been paying.

Face Value:The value of a bond that appears on the face of the bond, unless the value is otherwise specified by the issuing company. Face value is ordinarily the amount the issuing company promises to pay at maturity. Face value is not an indication of market value.

Fixed Charges: A company's expenses, such as bond interest, which it has agreed to pay whether or not earned, and which are deducted from income before earnings on equity capital are computed.

Flat:This term means a bond is being traded without any accrued interest included. It is applied to bonds which are in default of interest. Flat means that the market price is the full price. Income bonds, which pay interest only when earned, are usually traded flat. All other bonds are usually dealt in "and interest," the seller receiving the market price plus interest accrued since the last payment date. When applied to a stock loan, flat means without premium or interest.

Floor:The trading area—about two thirds the size of a football field—where stocks and bonds are bought and sold.

Floor BrokenA member of the Stock Exchange who trades orders on the floor of the Exchange to buy or sell any listed stock.

Floor Trader:Any member of the Stock Exchange who trades on the floor for his own account.

Formula Investing:An investment technique. One formula calls for the shifting of funds from common shares to pre­ferred shares or bonds as the market, on the average, rises above a certain predetermined point—and the return of funds to common share investments as the market average declines.

Free and Open Market: A market in which supply and de­mand are expressed without restraint in terms of price. It contrasts with a controlled market in which supply, demand, and price may all be regulated.

Funded Debt: Usually interest-bearing bonds of a company. Could include long-term bank loans. Does not include short-term loans, or preferred or common stock.

General Mortgage Bond:A bond which is secured by a blanket mortgage on the company's property, but which is often outranked by one or more other mortgages.

Gilt-Edged: Refers to a high-grade bond issued by a company which has demonstrated its ability to earn a comfortable profit over a period of years and pay its bond-holders their interest without interruption.

Give Up:A term with two different meanings. One: A mem­ber of the Exchange on the floor may act for a second mem­ber by executing an order for him with a third member. The first member tells the third member that he is acting on behalf of the second member and gives the second member's name rather than his own. Two: If a person has an account with Doe & Company but is in a town where Doe has no office, he may go to another member firm and tell them he has an account with Doe & Company and would like to buy some stock. After verifying his account with Doe & Company, the firm may execute his order and tell the broker who sells the stock that the firm is acting on behalf of Doe & Com­pany. The firm thus gives up the name of Doe & Company to the selling broker. Or the firm may simply wire the order to Doe & Company for execution. In either case the person placing the order pays only the regular commission.

Good Delivery: Certain basic qualifications must be met before a security sold on the Exchange may be delivered. The security must be hi proper form to comply with the contract of sale and to transfer title by delivery to the pur­chaser.

Government Bonds: Obligations of the United States Govern­ment, regarded as the highest-grade issues in existence.

Growth Stock: Stock of a company with prospects for future growth—a company which over a period of tune seems des­tined to expand materially.

G.T.C. Order: "Good till canceled." A customer's order to his broker to buy or sell securities at a specified price, the order to remain in effect until it is either executed or canceled.

Guaranteed Bond: A bond which has interest or principal, or both guaranteed by a company other than the issuer. Usu­ally found in the railroad industry when large roads, leasing sections of trackage owned by small railroads, may guarantee the bonds of the smaller road.

Guaranteed Stock: Usually preferred stock on which divi­dends are guaranteed by another company, under much the same circumstances as a guaranteed bond.

Holding Company: A corporation which owns the securities of another, in most cases with voting control.

Hypothecation: The pledging of securities as collateral for a loan.

Inactive Post: A trading post on the floor of the New York Stock Exchange where inactive securities are traded in units of 10 shares instead of the usual 100-share lots. Better known in the business as Post 30.

Inactive Stock:An issue traded on an exchange or in the over-the-counter market in which there is a relatively low volume of transactions. Volume may be no more than a few hundred shares a week, or even less.

In-and-Out:Purchase and sale of the same security within a short period—a day, a week, or even a month. An in-and-out trader is generally more interested in day-to-day price fluctuations than dividends or long-term growth.

Income Bond:Generally, income bonds promise to repay principal but to pay interest only when earned. In some cases, unpaid interest on an income bond may accumulate as a claim against the corporation when the bond becomes due. An income bond may also be issued as a substitute for preferred stock.

Indenture:A written agreement under which bonds or de­bentures are issued, setting forth maturity date, interest rate, security, and other terms.

Index:A statistical yardstick expressed in terms of per­centages of a base year or years. For example, the Federal Reserve Board's index of industrial production is based on 1947-49 as 100. In January, 1957, the index stood at 146, which meant that industrial production that month was 46 per cent higher than in the base period. An index is not an average.

Interest:Payments a borrower makes to a lender for the use of his money. A corporation pays interest on its bonds to its bondholders.

Investment Banker:Also known as an underwriter; the mid­dleman between the corporation issuing new securities and the public. The usual practice is for one or more investment bankers to buy outright from a corporation a new issue of stocks or bonds. The group forms a syndicate to sell the securities to individuals and institutions. Investment bankers also distribute very large blocks of stocks or bonds—perhaps held by an estate.

Investment Counselor: One who is professionally engaged in rendering investment advisory and supervisory services.

Investment Trust:Acompany which uses its capital to invest in other companies. There are two principal types: the closed-end and the open-end, or mutual fund. Shares in closed-end investment trusts, some of which are listed on the New York Stock Exchange, are readily transferable in the open market and are bought and sold like other shares. Capitalization of these companies is fixed. Open-end funds sell their own new shares to investors, stand ready to buy back their old shares, and are not listed. Open-end funds are so called because their capitalization is not fixed; they issue more shares as people want them.

Issue:Any of a company's securities, or the act of distributing such securities.

Legal List:A list of investments selected by various states in which certain institutions and fiduciaries, such as insurance companies and banks, may invest. Legal lists are restricted to high-quality securities meeting certain specifications.

Leverage:The effect on the per-share earnings of the common stock of a company when large sums must be paid for bond interest of preferred stock dividends, or both, before the common stock is entitled to share in earnings. Leverage may be advantageous for the common when earnings are good but may work against the common stock when earnings decline. Example: Company A has 1,000,000 shares of common stock outstanding, and has no other securities. Earnings drop from $1,000,000 to $800,000 or from $1 to 80 cents a share, a decline of 20 per cent. Company B also has 1,000,000 shares of common stock, but must pay $500,000 annually in bond interest. If earnings amount to $1,000,000, there is $500,000 available for the common or 50 cents a share. But earnings drop to $800,000 so there is only $300,000 available for the common, or 30 cents a share— a drop of 40 per cent. Suppose, however, earnings of the company with only common stock increased from $1,000,000 to $1,500,000—earnings per share would go from $1 to $1.50, an increase of 50 per cent. But if earnings of the company which had to pay $500,000 in bond interest increased that much—earnings per common share would jump from 50 cents to $1 a share, or 100 per cent. When a company has common stock only, no leverage exists, because all earnings are available for the common, although relatively large fixed charges payable for lease of substantial plant assets may have an effect similar to that of a bond issue.

Liabilities:All the claims against a corporation. Liabilities include accounts and wages and salaries payable, dividends declared payable, accrued taxes payable, fixed or long-term liabilities such as mortgage bonds, debentures and bank loans.

Lien: Aclaim against property which has been pledged or mortgaged to secure the payment of a loan. A bond is usually a lien against specified property of a company.

Limit Order: Acustomer's order to a securities broker to buy or sell at a specific price or better. The order can be executed only at that price or a better one.

Liquidation: The process of converting securities or other property into cash. The dissolution of a company, and the distribution to its shareholders of the cash remaining after sale of its assets and the payment of all its indebtedness.

Liquidity:The ability of the market in a particular security to absorb a reasonable amount of buying or selling at rea­sonable price changes. Liquidity is one of the most important characteristics of a good market.

Listed Stock:The stock of a company which is traded on a national securities exchange, and for which a listing applica­tion and a registration statement, giving detailed information about the company and its operations, have been filed with the Securities & Exchange Commission and the exchange itself. The various stock exchanges have different standards for listing. Some of the guides used by the New York Stock Exchange for an original listing are: national interest in the company and its stock, at least 1,500 shareholders, 300,000 shares outstanding in the hands of the public, an earning power at the time of listing of at least $1,000,000 annually.

Load: The portion of the offering price of shares of open-end investment companies which covers sales commissions and all other costs of distribution. The load is incurred only on purchase, there being, in most cases, no charge when the shares are sold (redeemed).

Locked In: An investor is said to be locked in when he has a profit on a security he owns but does not sell because his profit would immediately become subject to the capital-gains tax.

Long: Signifies ownership of securities. "I am long 100 U.S. Steel" means the speaker owns 100 shares.

Manipulation: An illegal operation. Buying or selling a security for the purpose of creating a false or misleading ap­pearance of active trading, or for the purpose of raising or depressing the price to induce purchase or sale by others.

Margin: The amount paid by the customer when he uses credit to buy a security, the balance being advanced by the broker. Under Federal Reserve regulations, the initial margin required in the past 20 years has ranged from 40 per cent of the purchase price to 100 per cent.

Margin Call: A demand upon a customer to put up money or securities with the broker. The call is made when a pur­chase is made; it may also be made if a customer's equity in a margin account declines below a minimum standard set by the exchange or by the firm.

Market Order: An order by a customer to a broker to buy or sell at the best price available when the order reaches the trading floor.

Market Price: In the case of a security, market price is usually considered the last reported price at which the stock or bond sold.

Matched and Lost: When two bids to buy the same stock are made on the trading floor simultaneously, and each bid is equal to or larger than the amount of stock offered, both bids are considered to be on an equal basis. So the two bidders flip a coin to decide who buys the stock. Also applies to offers to sell.

Maturity:The date on which a loan or a bond or ade­benture comes due and is to be paid off.

Member Finn: Asecurities brokerage firm organized as a partnership and having at least one general partner who is amember of the New York Stock Exchange.

MIP:Monthly Investment Plan. A pay-as-you-go method of buying New York Stock Exchange listed shares on a reg­ular payment plan for as little as $40 a month, or $40 every three months. Under MIP the investor buys stock by the dollars' worth—if the price advances, he gets fewer shares, and if it declines, he gets more shares. He may discontinue purchases at any time without penalty. The only charge for purchases and sales is the usual commission for buying and selling, plus the regular odd-lot dealer differential. The com­mission ranges from 6 per cent on small transactions to slightly less than 1% per cent on larger transactions.

Mortgage Bond:A bond secured by a mortgage on a prop­erty. The value of the property may or may not equal the value of the so-called mortgage bonds issued against it.

Municipal Bond:A bond issued by a state or political sub­division, such as a county, city, town or village. The term also designates bonds issued by state agencies and authori­ties. In general, interest paid on municipal bonds is exempt from federal income taxes.

Mutual Fund:See Investment Trust.

NASD: The National Association of Securities Dealers, Inc. An association of brokers and dealers in the over-the-counter securities business.

Negotiable: Refers to a security, title to which, when prop­erly endorsed by the owner, is transferable by delivery.

Net Asset Value:A term usually used in connection with investment trusts, meaning net asset value per share. It is common practice for an investment trust to compute its as­sets daily, or even twice daily, by totaling the market value of all securities owned. All liabilities are deducted, and the balance is divided by the number of shares outstanding. The resulting figure is the net asset value per share.

Net Change: The change in the price of a security from the closing price on one day to the closing price on the follow­ing day on which the stock is traded. In the case of a stock which is entitled to a dividend one day, but is traded "ex-dividend" the next, the dividend is considered in computing the change. For example, if the closing market price of astock on Monday—the last day it was entitled to receive a50-cent dividend—was $45 a share, and at the close the next day, when it was "ex-dividend," was $44.50, the price would be considered unchanged. The same applies to a split-up of shares. A stock selling at $100 the day before a 2-for-l split and trading the next day at $50 would be considered unchanged. If it sold at $51, it would be considered up $1. The net change is ordinarily the last figure in a stock price list.

New Issue: A stock or bond sold by a corporation for the first time. Proceeds may be used to retire outstanding se­curities of the company, for new plant or equipment, or for additional working capital.

Non-Cumulative: Refers to preferred stock on which unpaid dividends do not accrue. Omitted dividends are, as a rule, gone forever.

Odd Lot:An amount of stock which is less than the estab­lished 100-share unit or 10-share unit of trading: from one to 99 shares for the great majority of issues, one to nine for so-called inactive stocks.

Odd-Lot Dealer: A member firm of the Exchange which buys and sells odd lots of stock-—one to nine shares in the case of stocks traded in 10-share units and one to 99 shares for 100-share units. The odd-lot dealer's customers are always commission brokers acting on behalf of their customers. Odd-lot dealers stand ready to buy or sell, for their own ac­counts, odd lots in any stock at any time. There are at least four representatives of odd-lot dealers at each of the 18 active trading posts on the floor of the New York Stock Exchange. Odd-lot prices are geared to the auction market. On an odd-lot market order, the odd-lot dealer's price is based on the first round-lot transaction which occurs on the floor following receipt at the trading post of the odd-lot order. The usual differential between the odd-lot price and the "effective" round-lot price is 12½cents a share for stock selling below $40, 25 cents a share for stock at $40 or more.

Off-Board:This term may refer to transactions over-the-counter in unlisted securities, or, in a special situation, to a transaction involving a block of listed shares which was not executed on a national securities exchange.

Offer:The price at which a person is ready to sell. Opposed to bid, the price at which one is ready to buy.

Open Order: An order to buy or sell a security at a specified price. An open order remains in effect until executed, or canceled by the customer.

Option: A right to buy or sell specific securities or properties at a specified price within a specified time.

Over-Bought: An opinion as to price levels. May refer to a security which has had a sharp rise or to the market as a whole after a period of vigorous buying, which, it may be urged, has left prices "too high."

Over-Sold: An opinion—the reverse of over-bought. Refers to a single security or a market which, it is believed, has de­clined to an unreasonable level.

Over-the-Counter: A market for securities made up of securi­ties dealers who may or may not be members of a securities exchange. Over-the-counter trading is done mainly by tele­phone. Thousands of companies do not have sufficient shares outstanding, stockholders, or earnings to warrant applica­tion for listing on a stock exchange. Others may prefer not
to make public all the information which listing requires. Securities of these companies are traded in the over-the-counter market, between dealers who act either as principals or as brokers for customers. The over-the-counter market is the principal market for United States Government bonds, municipals, bank and insurance stocks.

Paper Profit: An unrealized profit on a security still held. Paper profits become realized profits only when the security is sold.

Par: In the case of a common share, par means a dollar amount assigned to the share by the company's charter. Par value may also be used to compute the dollar amount of the common shares on the balance sheet. Par value has little significance so far as the market value of common stock is concerned. Many companies today issue no-par stock, but give a stated per-share value on the balance sheet. Par at one time was supposed to represent the value of the original investment behind each share in cash, goods, or services. In the case of preferred shares and bonds, how­ever, par is important. It often signifies the dollar value upon which dividends on preferred stocks, and interest on bonds, are figured. The issuer of a 3 per cent bond promises to pay that percentage of the bond's par value annually.

Participating Preferred: A preferred stock which is entitled to its stated dividend and, also, to additional dividends on a specified basis upon payment of dividends on the common stock.

Passed Dividend: A regular or scheduled dividend which is omitted.

Penny Stocks: Low-price issues, often highly speculative, selling at less than $1 a share. Frequently used as a term of disparagement, although a few penny stocks have developed into investment-caliber issues.

Point: In the case of share of stock, a point means $1. If General Motors shares rise 3 points, each share has risen $3. In the case of bonds, a point means $10, since a bond is quoted as a percentage of $1,000. A bond which rises 3 points gains 3 per cent of $1,000, or $30 in value. An ad­vance from 87 to 90 would mean an advance in dollar value from $870 to $900 for each $1,000 bond. In the case of market averages, the word "point" means merely that and no more. If, for example, the Dow-Jones industrial average rises from 470.25 to 471.25, it has risen a point. A point in the averages, however, is not equivalent to $1.

Portfolio:Holdings of securities by an individual or institu­tion. A portfolio may contain bonds, preferred stocks, and common stocks of various types of enterprises.

Preferred Stock: A class of stock which has a claim on the company's earnings before payment may be made on the common stock, and which is usually entitled to priority over common stock if the company liquidates. Usually entitled to dividends at a specified rate—when declared by the Board of Directors and before payment of a dividend on the com­mon stock—depending upon the terms of the issue.

Premium:The amount by which a preferred stock or bond may sell above its par value. In the case of a new issue of bonds or stocks, premium is the amount the market price rises over the original selling price. Also refers to a charge sometimes made when a stock is borrowed to make delivery on a short sale. May refer, also, to redemption price of a bond or preferred stock if it is higher than face value or market price.

Primary Distribution: Also called primary offering. The original sale of a company's securities.

Principal: The person for whom a broker executes an order, or a dealer buying or selling for his own account. The term principal may also refer to a person's capital, or to the face amount of a bond.

Prior Preferred: A preferred stock which usually takes prec­edence over other preferreds issued by the same company.

ProfitTaking: Selling to take a profit, the process of con­verting paper profits into cash.

Prospectus:A circular which describes securities being of­fered for sale to the public. Required by the Securities Actof 1933.

Proxy:Written authorization given by a shareholder to some­one else to represent him and vote his shares at a share­holders' meeting.

Proxy Statement: Information required by the Securities and Exchange Commission to be given stockholders as a pre­requisite to solicitation of proxies for a listed security.

Prudent-Man Rule:An investment standard. In some states, the law requires that a fiduciary, such as a trustee, may in­vest a fund's money only in a list of securities designated by the state—the so-called legal list. In other states, the trustee may invest in a security if it is one which a prudent man of discretion and intelligence, who is seeking a reason­able income and preservation of capital, would buy.

Puts and Calls: Options which give the right to buy or sell afixed amount of a certain stock at a specified price within a specified time. A put gives the holder the right to sell the stock; a call the right to buy the stock. Puts are purchased by those who think a stock may go down. A put obligates the seller of the contract to take delivery of the stock and pay the specified price to the owner of the option within the time limit of the contract. The price specified in a put or call is usually close to the market price of the stock at the time the contract is made. Calls are purchased by those who think a stock may rise. A call gives the holder the right to buy the stock from the seller of the contract at the specified price within a fixed period of time. Put and call contracts are written for 30, 60, or 90 days, or longer. If the purchaser of a put or call does not wish to exercise the option, the price he paid for the option becomes aloss.

Quotation:Often shortened to "quote." The highest bid to buy and the lowest offer to sell a security in a given market at a given time.

Rally:A brisk rise following a decline in the general price level of the market, or of an individual stock.

Realizing:See Profit Taking.

Record Date: The date on which you must be registered on the books of a company in order to receive a declared dividend or, among other things, to vote on company affairs.

Redemption Price:The price at which a bond may be re­deemed before maturity, at the option of the issuing com­pany. Redemption value also applies to the price the company must pay to call in certain types of preferred stock.

Refinancing:Same as refunding. New securities are sold by a company, and the money is used to retire existing securities. The object may be to save interest costs, extend the maturity of the loan, or both.

Registered Bond: A bond which is registered on the books of the issuing company in the name of the owner. It can be transferred only when endorsed by the registered owner.

Registered Representative: Present name for the older term "customers' man." The registered representative is an em­ployee of a Stock Exchange member firm, registered with the Exchange as having passed certain tests and met certain re­quirements, and authorized to serve the public customers of his firm. Also known as a"customers' broker."

Registrar:Usually a trust company or bank charged with the responsibility for preventing the issuance of more stock than authorized by a company.

Registration:Before new securities may be publicly offered by a company, or outstanding securities offered by controlling stockholders—through the mails or in interstate commerce —the securities must be registered under the Securities Act of 1933. The application must be filed with the Securities and Exchange Commission by the issuer. It must disclose perti­nent information relating to the company's operations, securi­ties, and management, and the purpose of the public offering. Securities of railroads under jurisdiction of the Inter­state Commerce Commission, and certain other types of securities, are exempted. On security offerings involving less than $300,000, only limited information is required. Before a security may be admitted to dealings on a na­tional securities exchange, it must be registered under the Securities Exchange Act of 1934. The application must dis­close pertinent information relating to the company's opera­tions, securities, and management. Registration may become effective 30 days after the Securities and Exchange Com­mission receives certification by the exchange of approval of listing and registration, or sooner, by special order of the Commission.

Regular Way Delivery:Unless otherwise specified, securities (other than Government bonds) sold are to be delivered to the buying broker by the selling broker—and payment made to the selling broker by the buying broker—on the fourth business day after the transaction. Regular way delivery for Government bonds is the following business day.

Regulation T: The Federal regulation governing the amount of credit which may be advanced by brokers and dealers to customers for the purchase of securities.

Regulation U:The Federal regulation governing the amount of credit which may be advanced by a bank to its customers for the purchase of securities.

Rights: When a company wants to raise more funds by issuing additional securities, it may give its stockholders the opportunity, ahead of others, to buy the new securities in proportion to the number of shares each owns. The piece of paper evidencing this privilege is called a right. Because the additional stock is usually offered to stockholders at less than the current market price, rights ordinarily have amarket value of their own and are actively traded. In most cases they must be exercised within a relatively short period. Failure to exercise or sell rights may result in actual loss to the holder.

Round Lot:Aunit of trading or a multiple thereof. On the New York Stock Exchange, the unit of trading is generally 100 shares of stocks, and $1,000 par value in the case of bonds.

Scrip:A certificate exchangeable for stock or cash before a specified date, after which it may have no value. Usually is­sued for fractions of shares in connection with a stock div­idend or split, or in reorganization of a company. For example, a stock dividend might amount to only 1/3 share, so scrip is issued instead of a stock certificate for 1/3 share. Scrip is not traded on the New York Stock Exchange.

Seat:A traditional figure of speech for a membership on a securities or commodity exchange. Price and admisssion re­quirements vary.

SEC:The Securities and Exchange Commission, established by Congress to help protect investors. The SEC administers the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act, the Investment Company Act, the Investment Advisors Act, and the Public Utility Holding Company Act.

Secondary Distribution:Also known as a secondary offering. The redistribution of a block of stock some time after it has been sold by the issuing company. The sale is handled off the Stock Exchange by a securities firm, or group of firms, and the shares are usually offered at a fixed price which is related to the current market price of the stock. Usually the block is a large one, such as might be involved in the settlement of an estate. The security may be listed or unlisted. Exchange approval is required for member firms to participate in a secondary distribution of a listed stock.

Seller's Option:A special transaction on the Stock Exchange which gives the seller the right to deliver a stock or bond at any time within a specified period, ranging from not less than five business days to not more than 60 days.

Selling Against the Box. A method of protecting a paper profit. For example, a person owns 100 shares of XYZ, which has advanced in price, and he thinks the price may decline. So he sells 100 shares short, borrowing 100 shares to make delivery. He retains in his security box the 100 shares which he owns. If XYZ declines, the profit on his short sale is exactly offset by the loss in the market value of the stock he owns. If XYZ advances, the loss on his short sale is exactly offset by the profit in the market value of the stock he has retained. He can close out his short sale by buying 100 shares to return to the person from whom he borrowed, or he can send him the 100 shares which he himself owns.

Serial Bond: An issue which matures in relatively small amounts at periodic stated intervals.

Short Sale:Aperson who believes a stock will decline and sells it though he does not own any has made a short sale. For example: A person instructs his broker to sell short 100 shares of ABC. His broker borrows the stock so he can deliver the 100 shares to the buyer, and deposits the money value of the borrowed shares with the lender. If the person who sells short can subsequently buy ABC at a lower price than he sold it for, his profit is the difference between the two prices—not counting commissions and taxes. But if he has to pay more for the stock than the price he received, the difference is the amount of his loss. Stock Exchange and Federal regulations govern and limit the conditions under which a short sale may be made on anational securities exchange.

Short Covering:Buying stock to return shares previously bor­rowed to make delivery on a short sale.

Short Position: Stocks sold short and not covered as of aparticular date. On the New York Stock Exchange, a tabula­tion is issued a few days after the middle of the month listing all issues on the Exchange in which there was a short position of 5,000 or more shares, and. issues in which the short position had changed by 2,000 or more shares in the preceding month. This tabulation is based on reports of positions on member firms' books. Short position also means the total amount of stock an individual has sold short and has not covered, as of a particular date. Initial margin re­quirements for a short position are the same as for a long position.

Sinking Fund:Money regularly set aside by a company to redeem its bonds or preferred stock from time to time as specified in the indenture or charter.

Special Offering:Occasionally a large block of stock becomes available for sale which, due to its size and the market in that particular issue, calls for special handling. A notice is printed on the ticker tape announcing that the stock will be offered for sale on the floor of the Exchange at a fixed price. Member firms may buy this stock for customers di­rectly from the seller's broker during trading hours. The price is usually based on the last transaction in the regular auction market. If there are more buyers than stock, allot­ments are made. Only the seller pays a commission on a special offering.

Specialist:An Exchange member who assumes two respon­sibilities: First, to maintain an orderly market, insofar as reasonably practicable, in the stocks in which he is registered as a specialist. In order to maintain an orderly market, the specialist must be prepared to buy or sell for his own ac­count, to a reasonable degree, when there is a temporary dis­parity between supply and demand. Second, the specialist acts as a broker's broker. When a commission broker on the exchange floor receives a limit order, say, to buy at $50 a stock then selling at $60—he cannot wait at the particular post where the stock is traded until the price reaches the specified level. So he leaves the order with the specialist, who will try to execute it in the market if and when the stock de­clines to the specified price. At all times, the specialist must put his customers' interests above his own. There are about 350 specialists on the New York Stock Exchange.

Special Bid:A method of filling an order to buy a large block of stock on the floor of the Exchange. In a special bid, the bidder for the block of stock—a pension fund, for instance, will pay a special commission to the broker who represents him in making the purchase. The seller does not pay a com­mission. The special bid is made on the floor of the Ex­change at a fixed price which may not be below the last sale of the security or the current bid in the regular market, whichever is higher. Member firms may sell this stock for customers directly to the buyer's broker during trading hours.

Specialist Block Purchase:Purchase by the specialist for his own account of a large block of stock outside the regular market on the Exchange. Such purchases may be made only when the sale of the block could not be made in the regular market within a reasonable time and at reasonable prices, and when the purchase by the specialist would aid him in maintaining a fair and orderly market.

Specialist Block Sale: Opposite of the specialist block pur­chase. Under exceptional circumstances, the specialist may sell a block of stock for his own account outside the regular market on the Exchange, at a price above the prevailing market. The price is negotiated between the specialist and the buyer's broker.

Speculator: One who is willing to assume a relatively large risk in the hope of gain. His principal concern is to increase his capital rather than his dividend income. The speculator may buy and sell the same day, or speculate in an enterprise which he does not expect to be profitable for years.

Split: The division of the outstanding shares of a corporation into a larger number of shares. A 3-for-l split by a company with one million shares outstanding would result in three million shares outstanding. Each holder of 100 shares before the 3-for-l split would have 300 shares, although his pro­portionate equity in the company would remain the same, since 100 parts of one million are the equivalent of 300 parts of three million. Ordinarily splits must be voted by directors and approved by shareholders.

Stock Ahead: Sometimes an investor who has entered an order to buy or sell a stock at a certain price will see trans­actions at that price reported on the ticker tape while his own order has not been executed. The reason is that other buy and sell orders at the same price came in to the specialist ahead of his and had priority.

Stock Clearing Corporation: A subsidiary of the New York Stock Exchange which acts as a central agency for security deliveries and money payments between member firms of the Exchange.

Stock Dividend: A dividend paid in securities rather than cash. The dividend may be additional shares of the issuing company, or shares of another company (usually a subsid­iary) held by the company.

Stockholder of Record: A stockholder whose name is regis­tered on the books of the issuing corporation.

Stop Order:An order to buy or sell which becomes a market order as soon as the price of the stock reaches, or sells through, the price specified by the buyer or seller. A stop order may be used in an effort to protect a paper profit, or to try to limit a possible loss to a certain amount. Since it becomes a market order only when the stop price is reached, there is no certainty that it will be executed at that price.

Stopped Stock: Refers to a service performed—in most cases by the specialist—for an order given him by a commission broker. Let us say that XYZ just sold at $50 a share. Broker A comes along with an order to buy 100 shares at the market. The lowest offer is $50.50. Broker A believes he can do better for his client than $50.50, that he might perhaps get the stock at $50.25. But he does not want to risk missing the market—that is, the next sale might be $50.50 and the following one even higher. So he asks the specialist if he will stop 100 at ½($50.50). The specialist agrees. The specialist thus guarantees Broker A that he will get 100 shares at 50½ if the stock sells at that price and the stopped-stock request does not conflict with any public orders in the specialist's book. In the meantime, if the specialist or Broker A suc­ceeds in executing the order at $50.25, the stop is called off.

Street Name: Securities held in the name of a broker in­stead of in his customer's name are said to be carried in a street name. This occurs when the securities have been bought on margin, or when the customer wishes the security to be held by the broker.

Switching: Selling one security and buying another.

Syndicate: A group of investment bankers who together un­derwrite and distribute a new issue of securities or a large block of an outstanding issue.

Tax Exempt Bonds: The securities of states, cities, and other public authorities specified under Federal law, the interest 01 which is either wholly or partly exempt from Federal income taxes.

Technical Position: A term applied to the various internal factors affecting the market; opposed to external forces suet as earnings, dividends, political considerations, and genera economic conditions. Internal factors include the size of the short interest, whether the market has had a sustained ad­vance or decline without interruption, or a sharp advance 01 decline on small volume, and the amount of credit in use in the market.

Thin Market: A market in which there are comparatively few bids to buy or offers to sell, or both. The phrase may apply to a single security or to the entire stock market. In a thin market, price fluctuations between transactions are usually larger than when the market is liquid. A thin market in a particular stock may reflect lack of interest in that issue, or a limited supply of or demand for stock in the market.

Ticker: The instrument which prints prices and volume of security transactions in cities and towns throughout the United States within minutes after each trade on the floor.

Tips: Supposedly "inside" information on corporation affairs.

Trader: One who buys and sells for his own account for short-term profit.

Trading Post: One of 18 horseshoe-shaped trading locations on the floor of the New York Stock Exchange at which stocks assigned to that location are bought and sold. About 75 stocks are traded at each post.

Transfer: This term may refer to two different operations. One: the delivery of a stock certificate from the seller's broker to the buyer's broker and legal change of owner­ship, normally accomplished within a few days. Two: record­ing the change of ownership on the books of the corporation by the transfer agent. When the purchaser's name is recorded on the books of the company, dividends, notices of meetings, proxies, financial reports, and all pertinent literature sent by the issuer to its securities holders are mailed direct to the new owner.

Transfer Agent: A transfer agent keeps a record of the name of each registered shareowner, his or her address, and the number of shares owned, and sees that certificates presented to his office for transfer are properly canceled and new cer­tificates issued in the name of the transferee.

Transfer Tax: A tax imposed by New York State, a few other states, and the Federal Government when a security is sold or transferred from one person to another. This tax is paid by the seller. The present New York tax ranges from one cent a share on stock selling below $5 a share to four cents a share on stock selling at $20 or more. The present Fed­eral tax is based on par value with no-par considered $100-par for tax purposes. In odd-lot transactions both buyer and seller pay the Federal tax; the state tax is paid only by the seller.

Treasury Stock: Stock issued by a company but later reac-quired. It may be held in the company's treasury indefinitely, reissued to the public, or retired. Treasury stock receives no dividends and has no vote while held by the company.

Turnover: The number of shares changing hands. For ex­ample, a three-million-share day means that that many shares changed hands. Odd-lot turnover is tabulated separately and ordinarily is not included in reported volume.

Two-Dollar Brokers: Members on the Exchange floor who execute orders for other brokers having more business at that time than they can handle themselves, or for firms who do not have their member-partner on the floor. The term de­rives from the time when these members received $2 per hundred shares for executing such orders. The fee today varies with the price of stock and is paid by the broker.

Underwriter: See Investment Banker.

Unlisted: A security not listed on a stock exchange.

Unlisted Trading Privileges: On some exchanges a stock may be traded at the request of a member, without any prior ap­plication by the company itself. The company has no agree­ment to conform with standards of the exchange. Companies admitted to unlisted trading privileges prior to enactment of the Securities Exchange Act of 1934 are not subject to the rules and regulations under that Act. Today, admission of a stock to unlisted trading privileges requires Securities and Exchange Commission approval of an application filed by the exchange. The information in the application must be made available by the exchange to the public. No unlisted stocks are traded on the New York Stock Exchange.

Up Tick:A term used to designate a transaction made at aprice higher than the preceding transaction. Also called a "plus tick." A stock may be sold short only on an up tick, or on a "zero-plus tick." A "zero plus tick" is a term used for a transaction at the same price as the preceding trade but higher than the preceding different price.

Conversely, down tick, or "minus tick," is a term used to designate a transaction made at a price lower than the pre­ceding trade. A "zero-minus tick" is a transaction made at the same price as the preceding sale but lower than the pre­ceding different price.

Voting Right:The stockholder's right to vote his stock in the affairs of his company. Most common shares have one vote each. Preferred stock usually has the right to vote when preferred dividends are in default. The right to vote may be delegated by the stockholder to another person.

Warrant:A certificate giving the holder the right to purchase securities at a stipulated price within a specified time limit or perpetually. Sometimes a warrant is offered with securities as an inducement to buy.

When Issued: A short form of "when, as and if issued." The term indicates a conditional transaction in a security author­ized for issuance but not as yet actually issued.

Wire House: A member firm of the Stock Exchange with branch offices linked together by a communications network.

Working Control:Theoretically, ownership of 51 per cent of a company's voting stock is necessary to exercise control. In practice—and this is particularly true in the case of a large corporation—effective control sometimes can be exerted through ownership, individually or by a group acting in con­cert, of less than 50 per cent.

Yield:Also known as return. The dividends or interest paid by a company expressed as a percentage of the current price —or, if you own the security, of the price you originally paid. The return on a stock is figured by dividing the total of dividends paid in the preceding 12 months by the current market price—or, if you are the owner, the price you orig­inally paid. A stock with a current market value of $40 a share which has paid $2 in dividends in the preceding 12 months is said to return 5 per cent ($2 -5- $40). The current return on a bond is figured the same way. A 3 per cent $ 1,000 bond selling at $600 offers a return of 5 per cent ($30h-$600).