Question
Earlier this year, you purchased $5,000 worth of an Spartan Power common stock. At the same time, your sister purchased $5,000 of Spartan Power's senior
Earlier this year, you purchased $5,000 worth of an Spartan Power common stock. At the same time, your sister purchased $5,000 of Spartan Power's senior debt with a 5% coupon at par. At the time of purchase, he bond was rated AAA. Last week the company announced it invented a new battery that would likely go into every new electric car manufactured over the next 10 years. Which investment has the greatest chance of earning a large return based on the new invention?
a. Your sister's Bond Investment
b. Your common stock investment
c. Both have equal probability of receiving the same amount
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