3-4 Suppose your employer offers you a choicebetween a $5000 bonus and
QUESTION
3-4 Suppose your employer offers you a choicebetween a $5000 bonus and 100 shares of the company stick. Whichever one you choose will be awarded today. The stock iscurrently trading for $63 per share. If you are free to tradeit immediately, which form of bonus should you choos
Bonus inCash = $5,000Bonus in Stock = $6,300 (100shares * $63)Current ShareValue = $63Total Bonus StockValue = $6,300 Total Bonus inCash = $5,000 Option: 1 If youare trade the stock immediately at present Market Value you willget the amount (100 shares * $63) $6,300. This $6,300 stock valueis more than the Cash
us. Thus, you are better to go for Stock Bonus. Option: 2 If you keep the stock fora year, the Stock Value depends on the Market fluctuations. Thus,your decision also depends on the Market.Hope it may helps you
ANSWER:
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