Equivalent

This word when applied to the price of a stock means a price that is equal to the price for the same stock when it is quoted on a different basis. The price in London of an American stock is equivalent to the price in New York when the stock is selling in London at a price which, after allowing for the difference in the method of quoting, is equal to the price at which the stock is selling in New York. In dealings in American stocks on the London Stock Exchange 4 shillings is counted $1. Four shillings being equal to 97 1-3 cents the price of an American stock must be 2 2-3 ¥ per cent (quotably 2 5-8 per cent) higher in London than in |; |. a ae - —_— | New York if the London-price is to be equivalent to (or at a parity with) the New York price. Not 2 5-8 per cent of the face value is to be added arbitrarily to the New York price, but 2 5-8 per cent of the New York price, whatever it may be, is to be added to the New York price to make an equivalent London 0 price. Thus, for a stock selling at 50 in New York the equivalent price in London would be 51 3-8 (while the fraction 3-8 is not strictly correct it is quotably correct). For a stock selling at 100 in New York the equivalent price in London would be 102 5-8. Conversely, for a stock selling at 100 in London the equivalent price in New York would be 97 3-8 and for a stock selling at 50 in London the equivalent price in New York would be 48 5-8. In grain there is a normal difference in price between two markets equal to the cost of transporting the grain from the market where the lower price prevails to the market where the higher price prevails. When the: difference is normal equivalent prices prevail. It is the same in cotton, etc. 186