Equity graph and answer the following questions preferred stock could later be converted common stock has no precise meaning term common stock has no precise consistent or inconsistent with market of draw from the graph for mutual percent of equity mutual funds outperformed suggests that you study the graph inconsistent with market efficiency description of the common stock special preference in either dividends graph for mutual fund investors dividends or in bankruptcy less of par value percent of equity mutual funds outperformed the Vanguard 500. Dan suggests that you study the graph and answer the following questions: 1. What implications do you draw from the graph for mutual fund investors? 2. Is the graph consistent or inconsistent with market efficiency? Explain carefully. 3. What investment decision would you make for the equity portion of your 401(k) account? Why? 80 Ratio of Managed Equity Funds Beating Vanguard 500 : 10Year Returns 1986 70 60 50 40 30 20 10 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 SOURCE: Author calculations using data from the Center for Research in Security Prices (CRSP) Survivor Bias Free U.S. Mutual Fund Database. 404 Part IV Capital Structure and Dividend Policy06,,,0 billion yen (2.6 billion). Each of the shares of preferred stock could later be converted into 10 shares of common stock,,,, of these sources. We will also discuss how companies have financed themselves in recent years. CHAPTER 14 405 14.1 Common Stock The term common stock has no precise meaning. It is usually applied to stock that has no special preference in either dividends or in bankruptcy. A description of the common stock of AnheuserBusch in 2005 is presented here: ANHEUSERBUSCH Common Stock and Other Shareholders 0xE2 0x99 Equity December 31,05 (in millions) Common stock,,,,,cess of par value 1,1.8 Retained earnings