Expert Answer :You have finally saved $10,000 and are ready to ma

Solved by verified expert :You have finally saved $10,000 and are ready to make your first investment. You have the three following alternatives for investing that money:Bank of Canada bonds with a par value of $1,000, that pays a 6.35% on its par value in interest, sells for $1,020, and matures in 5 years.Southwest Bancorp preferred stock paying a dividend of $2.63 and selling for $26.25.Emerson Electric common stock selling for $52, with a par value of $5. The stock recently paid a $1.60 dividend and the firm’s earnings per share has increased from $2.23 to $3.30 in the past 5 years. The firm expect to grow at the same rate for the foreseeable future.Your required rates of return for these investments are 5% for the bond, 8% for the preferred stock, and 12% for the common stock.Instructions:Using the information above, answer the following questions:Calculate the value of each investment based on your required rate of return.Select an investment you would prefer explaining why.Assume Emerson Electric’s managers expect the earnings to grow at 1% above the historical growth. How does this affect your answers in (1) and (2)?Explain the potential risk(s) you are exposed to for each of the three alternatives.