Assume you are trying to choose between two investments: 1. A $5,000 bond with 6% interest rate and repayment in 10 years. 2. $5,000 invested in company stock that has traditionally paid $100 dividend annually. (The assumption is that you may hold the stock indefinitely or may sell it at any time.) Decide on one piece of additional information you would like to know that may help you decide which investment you will choose and why it would be helpful.
Revenue from investing in bond $5,000 x 6% = $300
& $3,000 in 10 years.
Revenue from investing in stock actually depends on the market situation, as stock market is highly volatile ,it can yield handsome amount of money or it can perform worse in terms of returns.
Assuming stock is held for 10 years and the company pays $100 dividend throughout. It only amounts to $1,000. Whereas in 10 years the bond will yield $3,000.
On the other side stock can grow fast and can be sold at higher values but stocks carry market risks.
The additional information i require is the risk appetite of yours, If you're ready to take market risk then it is advisable to invest in stocks and if you want to be in a safer side then invest in bonds.
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