Chapter 10 Annuities, Stocks, and Bonds

Tenet Healthcare is a nationwide provider of health-care services. The company is headquartered in Santa Barbara, California. As of 1999, it employs close to 130,000 people nationwide. Tenet is a publicly held company, which means that its common stock is listed openly. Tenet Healthcare stock is listed on the New York and Pacific Stock Exchanges under the ticker symbol THC. Options are traded on the American Stock Exchange. The Bank of New York is Tenet's stock-transfer agent.

This company's acute-care hospitals offer comprehensive medical services. Tenet provides central support services to its hospitals from a Dallas-based operations center. These hospitals are designed to provide a complete range of care throughout a community or region. These services may include outpatient surgery centers, home health agencies, rehabilitation hospitals, psychiatric hospitals, and long-term care facilities.

In 1995, NME acquired American Medical Holdings (AMI) and renamed the combined company Tenet Healthcare Corporation. In 1997, Tenet Healthcare Corporation acquired OrNda and its subsidiary, Summit Health Ltd. The company continually looks for partnership prospects to further build and strengthen its networks.

All this information and more can be found at www.tenethealth.com.

Problem:

Preparation:

In preparation for this problem, do the following:

• Collect information about Tenet stock, including its stock symbol and the exchanges it is traded on
• Review the terms the Dow, index, return, and NYSE listed in your textbook
• Locate investor information on the Internet. Start at www.tenethealth.com

It is important to list all Web sites used to locate information. Some suggested sites include www.nasdaq-uk.com/reference/glossary.stm, www.nyse.com, www.kiplinger.com/magazine/departme.html. For fun, visit http://game.etrade.com/.

Questions:

1. People invest for a variety of reasons. One reason may be to accumulate money for retirement. There are also a number of reasons people do not invest. Some may believe one needs to be rich to invest. This 'Net Asset On-Line problem is designed to allow you to research investing by accessing information via the Internet. Locate information that will assist you in making a valid case for or against investing. Compare What do you know about investing now that you did not know before this exercise? Have you developed any goals for investing because of this activity? If so, include those goals in your answer.

2. Assume that the close for the day for company XYZ was $129 7/8 per share, the low price was $129 3/4, and the high[AMH1] price was $130.
   1. What was the high price per share of XYZ stock? If 100 shares were purchased, what would the buyer pay?
   2. What is the closing price for the day for XYZ? How much would a seller receive if 100 shares of XYZ were sold at the closing price?
   3. Use www.stockquote.com to find the most recent bid and ask[AMH2] price for THC.

3. At times, a company will sell bonds to raise money. Bonds represent a promise from the company to pay the face value amount to the bond holder at a future date, along with interest payments at a stated rate. If a company goes bankrupt, who has first claim to the assets of the company, the bondholders or the stockholders?

4. Define the following investing terms:
   1. bear
   2. blue chip
   3. bull
   4. Wall Street

5. What is the difference between a full-service and a discount brokerage?

6. Is Tenet considered a blue chip stock? Explain your answer.

Include the date in your answers.

© Copyright 2000 Addison Wesley Longman, Inc.