An investor with £50,000 to invest is considering either buying shares or buying corporate bonds. Her financial adviser says that in the last few years shares have yielded on average 9% per annum and corporate bonds on average 5%. The financial adviser suggests that an investment in shares is preferable. Explain the reasons for the financial advisor’s suggestion and the factors that affect the share prices of listed companies. You must demonstrate an understanding of the underpinning concepts and ideas, using examples to support your explanation.

Answer rating: 100% (QA)

The financial adviser suggests that an investment in shares is preferable because historically equities have provided higher returns compared to fixedincome securities like corporate bonds Over the pa... View the full answer