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Suppose your employer offers you a choice between a $5,800 bonus and 400 shares of...

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Question

Finance

Suppose your employer offers you a choice between a

$5,800

bonus and

400

shares of the company stock. Whichever one you choose will be awarded today. The stock is currently trading for

$58

per share. Ignore transaction costs.

a. Suppose that if you receive the stock? bonus, you are free to trade it. Which form of the bonus should you? choose? What is its? value?

b. Suppose that if you receive the stock? bonus, you are required to hold it for at least one year. What can you say about the value of the stock bonus? now? What will your decision depend? on?

Answer & Explanation Solved by verified expert
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