91 / 110
MARCH, 1913]
The Gazette of the Incorporated Law Society of Ireland.
103
EXAMPLE B.
Showing an Average Return of
£4 9s.
Id.
per cent.
Return
per cent.
1. Argentine Govt. 4% Bonds,
1908, at 84
...
' ...
... £4 15
2
2. Brazil Govt. 4% 1910 Loan,
at 82
...
...
...
...
4 17
6
3. Chesapeake and Ohio Rly. 4i%
20-year
Convertible
Gold
Bonds, at 95 ...
...
...
4 14
8
4. Minneapolis. St. Paul and Sault
Ste. Marie Rly 4% 1st Mort
gage Gold Bonds,' at 100
...
4
0
0
5. Prussian 3i% Consols, at 87 ...
4
0
5
AVERAGE—£4 9s. 7d. per cent.
4. Buenos Ayres and Pacific Rly.
5% (1912) Deb. Stock, at 106
4
5. Argentine Gt. Western Rly. 5%
Deb. Stock, at 111
...
.'..
4 10
AVERAGE—£4 16s. 9d. per cent.
14
4
EXAMPLE C.
Showing an Average Return of
£4 16s. lOd.
•per cent.
\.
Chilian Govt. 5% 1896 Loan,
at 100...
...
...
... £"5
0
0
2. Chinese Imperial Rly. 5% Gold
Loan, at 97
...
...
...
5
3
1
3. Brazilian Govt. Rlys. Rescission
4% Bonds, at 83
...
...
4 16
4
In each of the three foregoing groups it is
assumed that an equal sum is invested in
each security named.
Some cautious investors might possibly
make the following criticism on the fore
going lists. They include :-—
(a)
Irredeemable stocks likely to decline
in capital value.
(b)
Redeemable stocks the present price
of which is par, so there is no
margin for appreciation in capital
The importance of investment of Capital
Moneys
in definite Redeemable Securities
without option, within certain dates, cannot be
over estimated.
The course of
low yielding perpetual
securities during the last 20 years has clearly
established the tendency to heavy decline in
capital value.
The following table will give a few examples
of the decline in gilt-edged securities between
the years 1901 and the present time :—
1901
I
Average
Price
f s.
d.
Consols, 2i%
...
...
...
...
...
94 13
9
Indian 3% (1948)
...
...
...
...
...
100
1
3
London County, 2i%
...
...
...
...
8617
6
Liverpool, 3|-%
...
...
...
...
...
117
5
0
Canada 3%, 1938
...
...
...
...
...
100 15
0
British Columbia 3% (1941)
...
...
...
92
6
3
German Imperial. 3%
...
...
...
...
88
7
6
Caledonian Rlv. 4% Debs.
...
...
...
;
135
5
0
Gt. Northern 3% Debs.
...
...
...
...
'
100
0
0
London & Nth. Western 3% Debentures
...
103
5
0
i
1913
Mid. Feb.
Prices
£
s. d.
74 10
0
76 10
0
66 10
0
97
0
0
86
0
0
81
0
0
76
0
0
102
0
0
70
0
0
77
0
0
Capital
Loss
£
s. d.
20
3
9
23 11
3
20
7
6
20
5
0
14 15
0
11
6
3
12
7
6
33
5
0
24
0
0
26
5
0
£1018 16
3 £812 10
0
i£206
6
3
AN AVERAGE Loss OF OVER 20 PER CENT.
Even in this List there are two definitely
redeemable securities. These are included to
show that they are also subject to temporary
decline, owing to
the remoteness of the
due date ;
but these stocks will improve as
they approach maturity, and ultimately, of
course, the capital value will be paid off at
par, so that there will be no final loss on the
investment.
In the 'case of irredeemable securities there