Evaluating Alternative Investments Ellen Hays received a windfall from one of her investments. She would like to

Question:

Evaluating Alternative Investments Ellen Hays received a windfall from one of her investments. She would like to invest $100,000 of the money in Linwood Inc., which is offering , preferred stock, and bonds on the open market. The has paid $8 per share in dividends for the past three years, and the company expects to be able to perform as well in the current year. The current market price of the is $100 per share. The preferred stock has an 8% rate, cumulative and nonparticipating. The bonds are selling at par with an 8% stated rate.
1. What are the advantages and disadvantages of each type of investment?
2. Recommend one type of investment over the others to Ellen and justify your reason.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...