| Show Explains Explain Value of Security Markets The Tha list ot of tocks stocks which are traded in on tho the New Now York stock exchange Illustration today Is striking Illus III of the vast vat extent to which mOdern business Is carried on by stock bystock corporations corporation and the Im- Im Importance Im Importance of our stock markets market 11 as c centers for theIr shares hares and obligations Stocks e of Cof practically every phase phao of ot modern business may now be found listed on the tho ex- ex ex exchange change and In practically alt all cases caes I Ithe the business Is hi directly dependent I upon the tho action of the exchange for Its start tart end and progress The Thc bond market I Is equally far tar reach reach- ing reaching In Its Ita op operations and tIme the di dl diversification versification of f the listings Is even evon greater greuter than that of the stOck market FOR roil RISK We might Imagine ourselves the of a new railroad and upon uon seeing tile thc advisability ot of placing a a road In hi a 31 particular pI lo lo 0 we wa propose to build After Acter goinG over She Iho plans with our engineer we wo find that tho the road rand may be built for ot of whIch we can ourselves ralso 6 G C leaving to be to to through some gome outside source To follow tollow the common procedure wa we sill 1 Issue common stock to cover the tho remaining 40 lie ier cent which must b bo be sold to investors In the tho open market The purchasers of ot this common stock aro assuming a Q great risk due duo to the fact that our road oad had not yet e proved proved- Its worth but It If the venture 11 Is I a Q success they will re- re rc-c rc he a return ample amplo to sato sato sate them for tor the clement element of risk that seasoned the Invest Invest- m mont nt Assuming that our road has hils met our expectations and has b en operated at f- f L profit wo vo see seo at a later time th the advantage In ex cx extending tending au our line or In adding addin some branch lines Hiles to c o our volume of business It will be nece necessary of ot course corse to raise addi additional funds for these improve Improve- Improvements Improvements improvements ments and upon the vote voto of our stockholders we decide rather than increase the common stock to Issue I sue bonds bon ls These bonds bond may bo be maybe maybo either cither deI debentures 0 or mortgage bonds the former being merely merly notes or to pa pay without security and tao tue latter being fit fit- fitI cured Mi-cured I cured by mortgages on our ou prop prep properties r erUes We Ve might however deem It more moo advisable I lo to issue a block of at this lilAc Tile The preferred whilo hilo It t Is In III the same general class as liS the com common corn com common cornmon mon Inasmuch as IlS tho hol holders are aro part owner owners differs In hi the matter maller f dividend payment Tho The divi dividend dond rate on this Ibis form of security Is fixed at the tile time timo of Issue and andIs andi andIs Is i never neer changed regardless of tho amount of ot earnings and must be met before participation of any common Tho The preferred however cr differs tram from bonds due to the fact that the r are lending their mon o e eL L br r II 0 to and at I I In 11 event of liquidation the tho bond bond- bondholders bondholders bondholders holders are arc actually creditors of otho the tho company while the stockholders ers aro are sharers sharer in the owner owner- ownership ownership ship STUDY STUDY- S Many must enter into the t ultimate decision as to the type of security to be offered rho rhe mOlle market at the be limo timo of Is- Is issue su sue the prea present nt condition of ot the tho th markets to the form A most apt to sell tho the of outstandIng issues and future futuro needs and ano prospects All these And an 1 many moro more points of oC economic na nature lure turo must bo ho considered before betor e an any offering i Is made to the In- In Investing investing Investing vesting public and tho the success of othe the 1 Issue Isue will wilt depend very Cry much on the wisdom of Its choice at the time o of Its Ita introduction To have considered the success success- successful ful fui operation lt t our road and It might be well no now to look at the themore moro more nt aspect the pro pro- procedure procedure in case co of failure The priority priority line In event of ot liquidation operates in the same manner as l e 0 operation After tiLe tho th settlement ot of suits arid ald other claims the will be satisfied then the tho debenture bondholders then time the preferred stockholders and then tho the common Each security Is retired In accordance with Its posItIon on tho the priority line |
