Given three possible investments in a company, an appropriate return for each would be: Capital creditor 6%7%8% , Preference share 7%8%6% , Common share 7%8%6% .

The reason why capital creditors have the smallestlargestmiddle return is because they get paid first and take the highest riskthey get paid first and take the lowest riskthey get paid last and take the highest riskthey get paid last and take the lowest risk . If you wish to have voting rights for a company's board of directors, you need to be a preference shareholdercommon shareholdercapital creditor .

Part B

Company A has a share price of $0.02, $0 of earnings and 1 million shares outstanding. Company B has a share price of $200, $200 million in earnings and 20 million in shares outstanding. Company C has a share price of $36, $600,000 in earnings and 1 million in shares outstanding.

Given the above information, Company BCompany CCompany A is the most expensive company and Company ACompany BCompany C is the most likely to be a value stock.