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4. 10 years after the IPO, Blake decides to retire. She has accumulated 200,000 shares in Sleepless Brownies stock as well as $2 million dollars
4. 10 years after the IPO, Blake decides to retire. She has accumulated 200,000 shares in Sleepless Brownies stock as well as $2 million dollars from compensation. The price of Sleepless Brownies stock is $72/share. a. Suppose she expects the return on Sleepless Brownies stock to get a return of 10% each year for the next 10 year. If she keeps her portfolio as is, what would be her net worth in 10 years? What if she invests completely in Sleepless Brownies stock? b. Suppose Blake can store her cash in a bank at a 0.2% monthly rate. If compounding is monthly, what is the EAR after 10 years? What is her net worth after 10 years? C. A fund offers her a guaranteed return of 11% per year, with a flat rate of $400,000 per year. Should she sell all of her stock now and invest everything in the fund? Should she sell all of her stock now to invest in the fund but keep the cash as contingency
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