Chapter 11, Problem 6SDC

Critical Thinking: Making a Decision asan Investor

You have retired after a long and successful career as a business executive and now spend a good portion of your time managing your retirement portfolio. You are considering three basic investment alternatives. You can invest in (1) corporate bonds paying 7 percent interest, (2) conservative stocks that pay substantial dividends (typically 5 percent of the stock price every year), and (3) growth-oriented technology stocks that pay no dividends.

Required:

Analyze each of these alternatives and select one. Justify your selection.