THE BOND MARKET
20
respectively above or below the price for the $1,000 denomi-
nation. With Liberty bonds, small pieces are readily exchange-
able the same day at the Federal Reserve Bank of New York
for large pieces, or vice versa; this speedy facility for exchange
permits small Liberty bonds to be bought and sold at very small
adverse differences from their price on $1,000 denominations.
But with bond issues where this speedy facility for exchange
does not exist to the same extent, it is necessary to deal in small
pieces at a greater adverse difference in price. But this $1,000
unit makes the purchase or sale of large blocks of bonds at the
same price on the Exchange very difficult and often impossible,
and as has been stated such large transactions usually occur in
the outside market.
As to the variation of bids and offers for bonds, the Con-
stitution (Rules, Chapter I, Sec. Q) states:
Bids or offers shall not be made at a less variation than 14 of one
dollar in stocks, and 28 of 1% of the par value of bonds: provided,
however, that the Committee of Arrangements may from time to time,
in its discretion, determine that transactions may be made at varia-
tions less than the above, fixed by said Committee, on transactions
in Foreign and Domestic Government bonds and notes, State, County
and Municipal securities, short time bonds and notes of corporations,
or on rights and stocks selling at a price of one-eighth or less, which
said variations shall thereafter be in effect and be reported to the
Governing Committee.
Thus the bulk of listed bonds are quoted by 14s like most
listed shares. During the period when Liberty bond trading
was extensive on the Exchange, variations of 1 /50 were per-
mitted, though later these were altered to 1 /32.
Share prices on the New York Stock Exchange are quoted
“flat” —that is, one pays no more than the quoted price for the
given share on account of accrued dividends, which are com-
pensated for by a rising price tendency as the date approaches
as of which they are payable. Thus it is necessary for the
Stock Exchange to announce the time at which shares will sell
‘ex-dividend,” or without this accrued dividend to the new
