Question

Four years ago, Sam invested in Grath Oil. She bought three of its $1,000 par value bonds at a market price of 93.938 and with an annual coupon rate of 6.5%. She also bought 450 shares of Grath Oil stock at $44.11, which has paid an annual dividend of $3.10 for each of the last ten years. Today, Grath Oil bonds have a market rate of 98.866 and Grath Oil stock sells for $45.55 per share. Use the scenario above to consider which statement best describes the relative risk between investing in stocks and bonds.

Answer 1

ik you dont need it no mo but its c

Explanation:

i just want the points

Answer 2

C. The market price of the bonds is more stable than the price of the company's stock.

Explanation:

In the context, Sam bought some bonds at the market price from Grath Oil and also invested in buying corporate shares which paid a dividend of $3.10 for each share annually for a period of ten years.

At present the market value of the bonds of Grath Oil is more. The market price of the bond is the amount of the money to be paid in an open market to buy a bond.

So the bond's market price is much more stable than the price of the company's stock. It is riskier to invest in company stocks.