would you like to invest in common stocks, preferred stocks, corporate bonds or Treasury bonds during...

would you like to invest in common stocks, preferred stocks, corporate bonds or Treasury bonds during COVID-19 pandemic? What will be the advantages and disadvantages of investing in each of these assets?

Expert Solution

I would be liking to invest into treasury bonds during covid-19 as I am highly sceptical about the movement of the securities as they have performed ahead of the time and neglecting any fear of the recession in the current economy so there has been a very big divergence of with the actual performance of the economy with the stock market and hence I will be rather avoiding investing into any kind of Corporate stocks or even corporate bonds because there is a risk related to insolvency of the company. Treasury bonds will be offering the risk-free status and even though they are often with a lower rate of interest but there would be absolute certainty of getting repaired with the principal as well as some interest and I would be able to prevent my capital from getting eroded.

Advantages of investment into corporate stocks that they are offering the highest rate of return but they will also have the risk of maximum exposure and no absolute certainty of making any rate of return because even dividend is not guaranteed so disadvantages is that they are highly risky and they will be having the residual claim on the assets.

Advantages related to preference shares are that they will be offering with the the dividend which are mandatory to be paid and they will also offer a preferential right in case of liquidation of the company but disadvantages related to preference shares that they will be offering with no voting rights and there is no participation in the management of the company and they are returning with the lower rate of return.

Advantages related to investment into corporate bonds are they will be offering with a uniform rate of return and they are having a claim on assets in case of liquidation of the company as well and interest are also tax deductible for the company but bonds are offering the lower rate of return and there will be no participation in the management as they are not offering with any kind of voting rights.

Advantage related to investment into treasury bonds are that they will be the risk free in nature and they will not offer any kind of risk and there will be also paying with uniform rate of return but risk related to treasury bonds are that they will be offering with very low rate of return and often underperforming other securities

jeff jeffy answered 2 years ago

. Jo Fixed would like to invest in the following three bonds: A. Corporate AAA. 5%...

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would you like to invest in common stocks, preferred stocks, corporate bonds or Treasury bonds during...

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. Jo Fixed would like to invest in the following three bonds: A. Corporate AAA. 5%...

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