Question

A customer has an existing portfolio that is mainly invested in high quality corporate bonds for stable income. As market interest rates have dropped, the customer's income has declined and she would like reallocate part of the portfolio to corporate bonds that offer portential growth. The best recommendation is to buy:

Answer 1

Answer: convertible debentures.

Step-by-step explanation:

A debentures convertible is a type of bond that generates a fixed growth rate, and can later be changed into stock. It is usually used when the shares of a company decrease, because, a bond have a fixed value and generates profits due to the fixed interest rate, so over time they have a great potential to be high equity when changing again in stock.

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