NATURE OF CAPITAL AND INCOME

 

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Capital, net. — (See Capital balance.) Ch. Vv, §3.
nominal. — The par or face value of the shares in a joint stock:
company, and hence also the original book value of the difference
 between assets and liabilities. Ch. V, § 2.
original. — The capital when the capital account is first opened.
It may be measured in two different ways, as nominal capital
and paid-up capital. Ch. IV, § 4.
paid-up. — The amount of original capital of a concern actually
paid in by the shareholders. Ch. IV, § 4. }
property. — A stock (or fund) of property existing at an instant
of time. Ch.V, § 1.
wealth. — A stock (or fund) of wealth existing at an instant of
time. (Syn. Capital instruments.) Ch. V, § 1.
value. — The value of a stock of wealth or property at an instant.
It is found by discounting (or “ capitalizing”) the value of the
income expected from the wealth or property. Ch. ¥.:§ 1
Capitalization. — A. The process of discounting by which expected
 income is translated into present capital-value. Usually
employed only when the income is considered uniform and
perpetual, in which case capitalization consists in dividing the
rate of income per annum by the rate of interest. Ch. IV, §6;
Ch. X117, § 1.
B. The nominal capital of a joint stock company. Ch. V, § 4.
rate of.— The reciprocal of the rate of interest. (Theoretically
also the reciprocal of the rate of discount. Practically this
meaning is never used.)
Capitalize. — To capitalize income is to find the capital-value
equivalent to that income. Ch. IV, § 6; Ch. XIII, § 1.
Caution, coefficient of. — The ratio of commercial value to mathematical
 value. Ch. XVI, § 6.
Chance, of any event. — The ratio of the number of cases in which
that event may occur to the total possible number of cases,
when all the cases are equally probable. Any two cases are
equally probable (to any particular person at any particular
time) if the person has no inclination to believe one rather than
the other to be true. Ch. XVI, § 2. (Syn. Probability.)
commercial value of. — The value which the chance will actually
command in the market. It is equal to the mathematical
value multiplied by the coefficient of caution, Ch. XVI, § 6.
mathematical value of. — The product of the value of the prize
at stake multiplied by the chance of winning it. Ch. XVI, § 5.
Coefficient, of caution. — The ratio of commercial value to mathematical
 value. Ch. XVI, § 6.