Finally, assume that Temp Force’s earnings and dividends arc exp


Question Description:

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Finally, assume that Temp Force’s earnings and dividends arc expected to decline by a constant 6% per year, that is, g = ?^?6%. Why would anyone he willing to buy such a stock, and at what price should it sell? What would be the dividend yield and capital gains yield in each year? Sam Strother and Shawna Tibbs are senior vice presidents of 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.

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