NATURE OF CAPITAL AND INCOME 
  
330 
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 differ- 
ence 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 ex- 
pected 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 mathemat- 
ical 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 mathe- 
matical value. Ch. XVI, § 6.