Congratulations! You have just been promoted at your company. As a top-tier director, the Director of Social Networking, the Chief Marketing Officer has just finished offering you your compensation package. As part of that package, you are able to select one of the following.

Option 1: A ten-year corporate bond with a face value of $10,000 that pays out a 1% coupon paid in semi-annual payments ($50 every six months). If you leave your position (quit or are terminated, your bond will be discounted at a 4% annual interest rate, and you will receive the present value of that bond. If you stay the entire 10 years, your bond will be paid out at face value, bringing to a close that level of compensation. If you are promoted again, you keep the bond and defer to one of the two payout options as just specified.

Option 2: 100 shares of perpetual preferred stock, with dividends paid monthly at $0.05 per share ($5.00/month). As well, if you choose to sell the stock, the company will buy the stock back at market + 10%. Currently, the stock sells for $150/share. If you leave the company, you will be required to 1) sell the stock back to the company, at market + 10%, for an exchange with an equal market value of common stock (which currently does not pay dividends) or 2) sell the stock back to the company at market + 10%. If you stay with the company, you have the option to sell back to the company at any time or you may keep it forever (you will not be required to sell it back on retirement).

Which option (bond or preferred stock) will you select and why? Be sure to use some finance concepts to support your answer.