1. In 1916 the Bethlehem Steel Corporation needed over $30,000,000 for the purchase of new property. This money is borrowed at 5% interest. Would it have been more profitable for the shareholders to sell additional stock? (See pp. 761-763.)

2. Plot the gross and net earnings and fixed charges of the following companies: Bethlehem Steel Corporation (pp. 761-763); May Department Stores (pp. 767-768); Chicago, Milwaukee & St. Paul (pp. 753-759); British Westinghouse Company (p. 640); French Westinghouse Company (p. 644); The Connecticut Company (p. 695); New York & Stamford Railway Company (p. 698).

3. (a) Prepare a table showing the following averages for each of the above companies, including as many years as are included in the Materials book for each company.

(1) The total average amount of stock.

(2) The total average amount of interest bearing indebtedness.

(3) The financial risk.

(b) Do these companies seem to have followed the rule that companies with stable gross income can borrow relatively more than those with variable gross earnings?

4. Suppose that in 1902 a stockholder of the United States Steel Company had asked you how he ought to vote on the questions raised by the Notice of Meeting on p. 89, what advice would you give and what reasons would you assign? (See Ripley's Trusts, Pools and Corporations, pp. 149-181.)

5. Can you think of any reasons, other than those on pp. 354-5. why public utility commissions insist on being shown that bonds will earn interest, while they do not demand proof that stock can earn dividends?

6. The law of a certain State provides that no corporation's bonded indebtedness may exceed the amount of its capital stock. Company X has issued bonds equal to the amount of its common stock, which is all outstanding, and which is selling at 45. The Company needs more money. What should it do?

7. Company A's average gross earnings for ten years have been $1,000,000 and its operating ratio 60%. Interest on its first mortgage bonds is $200,000 and on its second mortgage bonds $100,000 and on its third mortgage bonds $50,000. Its gross earnings decreased 10% and 40% of its operating expenses decreased proportionately, the remaining 60% being fixed.

(a) What was the operating ratio in the poor year?

(b) What was the factor of safety protecting the first, second and third mortgage bonds in the average or normal year, and what was the factor of safety for the same issues in the poor year?

(c) What was the decrease in the factor of safety protecting the several issues?

8. Refer to pp. 749-50. (a) How many times did the company earn its interest in 1914?

(b) What per cent did the company earn on its issued stock?

(c) What is the net working assets of the company and for how many years would this provide interest payments?

9. In dollars and cents: (a) What was the security back of the bonds of the American Smelting and Refining Company in 1914? (b) What was the equity? (c) What was the security back of the stock? (pp. 759-60.)