72 THE FISCAL PROBLEM IN MISSOURI 
bonds issued are usually sold either at a premium or at a 
discount, and only rarely at par. It follows that the true 
rate of interest will be affected by the amount of the premium 
or the discount, since in the one case more money is received 
than will be required for purposes of redemption, and in the 
other case the redemption payments will exceed the amount 
of money originally received. A second factor is the nominal 
or coupon rate of interest and the frequence of interest dates. 
The annual or semi-annual interest payments are a function 
of this rate and the par value of the obligations. While 
these payments are not the sole factor in determining the 
cost of money, under all ordinary conditions they are the 
most important factor. A third factor is the maturity date 
of the bonds, which is particularly important in cases where 
the bonds were sold at a considerable premium or discount. 
The premium or the discount depends in turn upon both the 
coupon rate of interest and the maturity dates. Other 
factors, such as callable or conversion features, need not be 
discussed here, as they have no particular application to the 
problem under consideration. 
The requisite information being available, it was decided to 
compute the cost of money or the true rate of interest on the 
receipts from the $60 million of state highway bonds issued 
during the years 1922 to 1927. The facts concerning the 
ten series of bonds comprising this issue are shown in Table 
24. The coupon rate of interest for the first three series 
issued in 1922 and 1923 was 414%,. Series D and E bore a 
coupon rate of 4%, and the later series a rate of 4249. The 
coupon rate was changed in accordance with money market 
conditions and the desired maturity dates, and such changes 
as were made are not indicative of any change in Missouri’s 
credit position. That the three earlier series were marketed 
at a higher coupon rate than any of the later issues may be 
attributed in large part to the relatively brief period for 
which they were issued. 
Five series! amounting to $32.5 million par were sold at a 
premium, and the total received on account of premium was 
$482,732.50. The other five series? were sold at a discount, 
the total discount amounting to $186,691.50. The net 
L Series A, F, H, I, and J. 2 Series B, C, D, E, and G.