APPENDIX TO CHAPTER XIII 381 
discount on this $25 is shown by the line B.D, which is there- 
fore the premium in the selling price of the bond. The total 
price is AB+ BD =AD. The price at later dates (taken 
each just before an installment) is represented by points on 
  
  
  
  
Cc ct 
5 25 
D 5 
BF---=-, a momo =o of 8 
Dp 
100 
  
  
BB CF cis js) Eies Hs 
A A 
Fic. 42. 
  
the discount curve DB' drawn with reference to CC' as a 
horizontal axis. Adding at each of these installment points a 
line equal to $5, we have the value just before interest pay- 
ments, and connecting the tops of these lines with the preceding 
interest intervals by discount curves reckoned at 4 9%, we have 
a series of teeth representing the normal course of the price of 
the bond from the present to maturity. 
In case a bond is sold at a 69 basis, we have the curve B'D), 
instead of B'D, with the teeth superimposed as before, the 
tooth curves, however, being in this case on a 6% slope.