decided to move part of her money to stocks . One evening , Sara told Terry about her decision and explained that she had found several stocks that she thought looked ― sort of interesting .‖ She described them as follows :
· North Atlantic Swim Suit Company . This highly speculative stock pays no dividends . Although the earnings of NASS have been a bit erratic , Sara feels that its growth prospects have never been brighter —― what with more people than ever going to the beaches the way they are these days ,‖ she says .
· Town and Country Computer . This is a long-established computer firm that pays a modest dividend yield ( of about 1.50 %). It is considered a quality growth stock . From one of the stock reports she read , Sara understands that T & C offers excellent long-term growth and capital gains potential .
· Southeastern Public Utility Company . This income stock pays a dividend yield of around 5 %. Although it ’ s a solid company , it has limited growth prospects because of its location .
· International Gold Mines , Inc . This stock has performed quite well in the past , especially when inflation has become a problem . Sara feels that if it can do so well in inflationary times , it will do even better in a strong economy . Unfortunately , the stock has experienced wide price swings in the past . It pays almost no dividends . Questions
a . What do you think of the idea of Sara keeping ― substantial sums ‖ of money in savings accounts ? Would common stocks make better investments for her than savings accounts ? Explain . b . What is your opinion of the four stocks Sara has described ? Do you think they are suitable for her investment needs ? Explain . c . What kind of common stock investment program would you recommend for Sara ? What investment objectives do you think she should set for herself , and how can common stocks help her achieve her goals ? d . ============================================