Sam Strother and Shawna Tibbs
are senior vice presidents of the Mutual of Seattle. They are
co-directors of the company’s pension fund management division, with
Strother having responsibility for fixed income securities (primarily
bonds) and Tibbs being responsible for equity investments. A major new
client, the Northwestern Municipal League, has requested that Mutual of
Seattle present an investment seminar to the mayors of the represented
cities, and Strother and Tibbs, who will make the actual presentation,
have asked you to help them.
To illustrate the common stock
valuation process, Strother and Tibbs have asked you to analyze the Temp
Force Company, an employment agency that supplies word processor
operators and computer programmers to businesses with temporarily heavy
workloads. You are to answer the following questions.
a. Describe briefly the legal rights and privileges of common stockholders.
AND SO ON
p. Temp Force recently issued
preferred stock. It pays an annual dividend of $5, and the issue price
was $50 per share. What is the expected return to an investor on this
preferred stock?
