What is a security that pays a fixed amount quarterly and allows profit if common stock rises?

The correct response is convertible preferred stock. This type of security typically pays a fixed dividend amount on a regular basis, such as quarterly, which provides a predictable income stream to investors. In addition to these fixed payments, convertible preferred stock comes with the unique feature that allows holders to convert their shares into a predetermined number of common stock shares, usually at a favorable ratio.

This conversion potential is what enables investors to benefit from an increase in the common stock's market price. If the value of the common stock rises significantly, investors can convert their preferred shares into common stock and realize profits from that appreciation. The combination of fixed dividend payments and conversion opportunities makes convertible preferred stock attractive to many investors seeking both stability and growth potential.

Other options may provide income or growth potential, but they do not encapsulate both features in the manner that convertible preferred stock does. Common stock pays dividends occasionally but does not provide fixed payouts. Corporate bonds yield fixed interest but do not allow for stock conversion, and while dividend-paying stocks provide income as well, they lack the conversion aspect associated with convertible preferred stock.