Jayson Hopper is faced with the decision of investing a $100,000 inheritance in Canada Savings Bonds or using it to purchase preferred shares of a Canadian corporation. The interest rate on the Canada Savings Bonds has been set at 3.5%, while the current dividend yield on the preferred shares is 4.5%. Because of risk considerations, Jayson requires that the preferred shares provide an after-tax return, which is at least 2% greater than that on the Canada Savings bonds. Jaysons federal tax rate is 29% and provincial tax rate is 11.16%

Required:

Canada Savings Bonds Preferred Shares

Which alternative should Jayson select and why?