Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-03-27
What Is 1t?

u. Wudt arc INC NoAAVUS WE Va
securities?
A. Well, there are bonds. The
best known bonds are government
bonds. If you are a bondholder
you have lent money to your gov
eminent, to a municipality II you
have a municipal bond. or to cor
poration if you have corporate
bond. You receive fixed rate Of
interest. And in event OF liquica-
ton your claims come ahead OF
stockholders. Preferred stock hold
ers are usually entitled to q fixed
dividend prior to anything being
paid to the common stock holders.
They also have prior claim on the
assets Of the corporation In the event
of liquidation.
@. Does it cost more to buy pre-
ferred? What are the advantages?.
A. Generally speaking, they are
higher priced. AS far as costing
more, you pay the same commission
rates to buy them as you pay for
common stock.
@. But the value doesn't 20 mp and
down?
A. theoretically the value Of q
preferred Il more stable than the
value Of q common stock. They are
safer dollar wise. On the other hand
they do not act as an imitation
hedge.
@. What are common stocks and
what makes them fiuctuate I'm value
more than preferred stocks?
A. When you buy common stock
In a corporation you are buying o
share in the ownership. Naturally.
If the company grows and prospers.
the stock rises in value. Also vice
versa.
@. II you buy . bond You are
merely l0aning some money 70 the
company? II you buy stock yen
are buying q piece Of the company?
A. That's correct.
@. Where are all Of these stock
sales, these transactions made?
A. A lot Of the transactions and
the ones that are known generally to
the public are those that take place
on the national exchanges. There Ia
the New York Stock Exchange,
which Is the biggest and the most
famous. All 1t Is is q common mar
ket place, where buyers and sellers
can meet through their representa-
tives to transact business.
@. Are there other exchanges
around the country?
A. Yes, there are o number Of
them. We have little exchange
here in Washington which used to
be the Washington Stock Exchange
its now a branch Of the Phila-
delphia- Baltimore Stock Exchange.
II trades local securities.
@. Are all the stocks bought and
sod on the exchanges?
A. No, in fact the vast majority
of stocks are traded in the overtime
counter markets where there Il no
common meeting place. There are
something like 1850 stocks. all told,
listed on the various exchanges.
There are some $4,000 stocks that
are traded over the counter. And
these stocks. many Of them, repre-
sent some Of our best corporations.
@. Tell US how the New York
Stock Exchange operates. What are
the links between the floor Of the
New York Stock Exchange and the
stock buyers and sellers around the
country?
A. Taking the New York Stock
Exchange as an example. You can
enter any brokers ONCE around the
country and place an order. That
order Is transmitted directly to an
Office In New York, which has Q line
direct TO the floor Of the exchange.
There the brokers floor partner will
take your order and 60 to o trading
post where that stock Is traded. He
will either buy or offer your stock.
Another broker will DO representing
q seller III you happen to be Q
buyer. II they can agree On price,
Q transaction will take place.