You are considering investing $830 in Higgs B. Technology Inc. You can buy common stock at $24.41 per share; this stock pays no dividends. You can also buy a convertible bond ($1,000 par value) that is currently trading at $830 and has a conversion ratio of 29. It pays $49 per year in interest. If you expect the price of the stock to rise to $34.59 per share in 1 year, which instrument should you purchase?

The holding period return on the purchase of the common stock would be %. (Round to two decimal places.)

The holding period return on the purchase of the convertible bond would be %. (Round to two decimal places.)

Which instrument should you purchase?(Select the best choice below.)

You should purchase the common stock because the holding period return is higher than the holding period return on the convertible bond.

You should purchase the convertible bond because the holding period return is higher than the holding period return on the common stock.