Two Competitive Brothers, Who Work in Two Different Industries, Were

question 34

Multiple Choice

Two competitive brothers, who work in two different industries, were comparing their salaries.
Because there is a difference of 4 years in their respective work experience, they decided to
Compare, not their actual salaries, but to compare their salaries against their company averages to
See who is doing better. The following gives the brothers salaries, companies mean, and standard
Deviation for each company.
Which brother earns a higher salary compared to the rest of their colleagues?

• A) Tom
• B) Andy
• C) They both compare the same when measured against their colleagues
• D) Unable to determine from the information given

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Definitions:

Liquidity Preference Theory

A theory suggesting that investors demand higher yields on securities with longer maturities due to the preference for liquidity and lower risk associated with shorter-term securities.

Short-term Investors

Individuals or entities that hold investments for a brief period, typically less than a year, aiming for quick profits.

Forward Rate

The predetermined interest rate for a future financial transaction, agreed upon today.

Short Rate

A one-period interest rate.