TeachMeFinance.com - explain Percentage
Percentage -- procuration.
Percentage. Rate per hundred or proportion in a hundred
parts. Thus, 1 per cent is 1 on (or in) 100. For instance, a
dividend of 1 per cent means $1 on each $100 of stock. Interest
at 5 per cent means $5 on each $100 of the whole
amount, which is $50 on a bond for $1,000. A premium of 3
per cent is $3 on each $100.
In Great Britain prices, dividends and interest are expressed
in percentages when stocks and bonds are spoken of, but when
shares are mentioned it is more usual to quote in fractions of
1 pound or in shillings and pence. Thus, the price of Brighton Railway deferred stock is 138 1/4 per cent and its dividend is
6 1/2 per cent; but the price of British Electric shares is 14
1/8 and the dividend is 18 shillings per share. Premiums follow
the same rule, being quoted in percentage on stocks and in
fractions of a pound or in shillings and pence on shares.
In insurance in Great Britain the premium is the consideration
paid annually or periodically in return for which the
company agrees to pay a sum at the death of the insured or
on his arrival at a certain age. It is calculated in pounds,
shillings and pence on each 100 pounds of the amount of the insurance.
Thus, a premium of 20 shillings per cent means that
20 shillings is the annual premium on each 100 pounds insured.
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