8.—17

38

We trust we have been able to make our explanation clear. Later on we shall have to address you on the question of converting the loans not now included, as well as on various points which we are still arranging in connection with the creation of the stock. We have, &c, P. G. Jultan, F. D. Bell, The Hon. the Colonial Treasurer, Wellington. Loan and Stock Agents. Enclosures referred to in No. 63. 1886.—Conversion op Loans : Computation of Equivalents. No. 1.—The Agent-Genebal to the Actuaries. Deab Sibs, — 7, Westminster Chambers, 19th January, 1886. It will be in your recollection that in November, 1884, you constructed a table showing the equivalent, in 4-per-cent. inscribed stock, of £100 of Consols at relative prices. I now wish you to construct a series of similar tables, showing the equivalents in the case of all the loans named in the list which I enclose herewith. You will find in each case the date given when the loan is repayable, the date when the dividends are paid, the rates of interest per cent., and the rate of sinking fund (if any); and annexed to each you will also find the present quotation of the loan on the Stock Exchange. Assuming a conversion to be made at the relative prices of to-day, the question is, What is the equivalent in 4-per-cent. inscribed stock in the case of each loan ? The equivalent should be given for every J per cent, higher or lower, within a range of 3 per cent, of the present quotations. I have, &c., A. H. Bailey, Esq., and Ralph P. Hardy, Esq. F. D. Bell.

New Zealand Securities quoted on the Stock Exchange.

No. 2.—The Actuaries to the Agent-Genebal. Deab Sib Fbancis, — London, 26th January, 1886. Enclosed we send you a series of tables showing the equivalent amount of 4-per-cent. stock that should be given for the several stocks referred to in your letter of the 19th instant, according to the market prices of each. We have excluded the " Five-thirties " and " Ten-forties :" the first because, the stock being immediately " noticeable," it is worth only about J per cent, premium ; and the second because, being also " noticeable " in 1888, or in about two years' time, the arithmetical value is only about 2 per cent, premium. The somewhat higher market prices of these two stocks are probably due to the expectation of the holders that they will not be paid off for some time. The following are the values of £100 stock in the loans for which conversion tables are herewith sent, taking i per cent., payable half-yearly, as the rate of interest upon New Zealand Government security— i.e., taking the price of 4-per-cent. inscribed stock (ex div.) at par :— £ £ s. d. 1860 Sixes of 1891, 93,100, value 109 15 9in January, 1886, dividend paid. 1863 Sixes of 1891, 201,500, value 109 15 9in March, 1886, dividend paid. 1863 Sixes of 1891, 329,900, value 109 15 9in December, 1885, dividend paid. 1863 Fives of 1914, 488,000, value 116 18 3in January, 1886, dividend paid. 1863 Fives of 1879, 524,000, value 103 13 4 m May, 1886, dividend paid. In all cases these values have been calculated upon the assumption that the dividend due was paid, so that the value represents the capital and its future yield. We have appended an example in each case, which may perhaps be useful. We have, &c, A. H. Bailey. Sir Francis Dillon Bell, K.C.M.G. Ralph P. Habdy. Loan of 1860: Sixes of 1891. Amount, £93,100: ) Interest, 6 per cent.: { Valn^J Repayable Ist July, 1891. j Payable Ist January and Ist July. \

Example: Thus, on any day on which the market prices are as follows: Loan of 1860: Sixes of 1891, £110; 4-per-cent. inscribed stock, £101 —then £108 18s. 3d. of 4-per-oent. inscribed stock is the equivalent of £100 of the (1860) Sixes of 1891. A. H. Bailey. 26th January, 1886. Ralph P. Hardy.

Name of Loan. Amount outstanding. When Loan repayable. When Dividends payable. Kate of Interest. Sinking Fund. Present Market Prices. (1860) Sixes of 1891 (1863) Sixes of 1891 (1863) Sixes of 1891 Fives of 1914 5-per-cent. Ten-forties Fives of 1879 4}-por-cent. Five-thirties £ 93,100 201,500 329,900 488,000 3,500,000 524,000 2,946,100 IstJulv, 1891 15th Mar., 1891 15th June, 1891 15th July, 1914 1st Mar., 1918 1st Nov., 1889 '1st Feb., 1905 1st Jan. and 1st July .. 15th Mar. and 15th Sept. 15th June and 15th Dec. 15th Jan. and 15th July 1st Mar. and 1st Sept. .. 1st May and 1st Nov. .. 1st Feb. and 1st Aug. .. 6 6 6 5 5 5 4} 2 2 2 1 108 to 110 109 „ 111 108 , 110 113 „ 115 104 , 106 104 „ 106 104 „ 105 * Note.—There are two series, 1904 and 1905, but it will be sufficient to compute for 1905.

Market Price of 4-per-cent. Inscribed Stock. Amount of 4-per-cent. Inscribed Stock, equivalent to each £100 of the above Stock, at the Market Prices undershown. Market Price of 4-per-cent. Inscribed Stock. 107J 108 108J 109 109J 110 110i 99 99} 100 100} 101 101} 102 £ s. a. 108 11 9 108 0 10 107 10 0 106 19 4 106 8 9 105 18 3 105 7 10 £ s. a. 109 1 10 108 10 10 108 0 0 107 9 3 106 18 8 106 8 1 105 17 8 £ e. a. 109 11 11 109 0 11 108 10 0 107 19 2 107 8 6 100 17 11 106 7 5 £ s. a. 110 2 0 109 10 11 109 0 0 108 9 2 107 18 5 107 7 9 106 17 3 £ s. a. 110 12 1 110 1 0 109 10 0 108 19 1 108 8 i 107 17 8 107 7 1 £ s. a. Ill 2 3 110 11 1 110 0 0 109 9 1 108 18 3 108 7 6 107 16 10 £ s. a. Ill 12 4 111 1 1 110 10 0 109 19 0 109 8 1 108 17 4 108 6 8 99 99} 100 100} 101 101} . 102