so and preterred stock. (c). Is points] A famous I\'T company offers you a job w

Question

so and preterred stock. (c). Is points] A famous I'T company offers you a job with two alternative compensation packagess -Option 1, 90k in salary, and restricted stock units (RSU) worth 90k - Option 2,. 150k in salary, and restricted stock units (RSU) worth 20k The RSU has a lock-in period of 3 years, during which time you cannot sell those shares for cash. The company's stock has a beta of 2.5. Which option would you possibly prefer if your spouse already works for the same IT company? If your spouse works in health care or higher education? Explain your logic from the point of view of portfolio risk and returns.

Explanation / Answer

#Option 1 90k in salary and 90k in RSU

Reason: To give Employee an incentive to stay with the company and receive the 90K shares, it puts them on a three-year vesting schedule. After one year of employment, Employee will receive 30K shares; after two years, another 30K, and so on until the employee receive all 90k shares at the end of 3 years. Depending on how the company's stock performs, employee may actually receive more or less. But they mentioned company's beta as 2.5, which clearly shows the company will outperform/more volatile than the market. High risk with high returns

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