Your Parents Have Informed You That They Plan to Reward

question 33

Multiple Choice

Your parents have informed you that they plan to reward you for your academic achievements with $10,000 when you graduate next year. The risk-free rate is 4%, and the expected return
On the market is 9%, with a standard deviation of 18%. What is the present value of this gift if
You assume that your future cash flow is independent of the return on the market? Round
Your answer to the nearest dollar.

• A)$9,615
• B)$8,850
• C)$9,174
• D)$9,467

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Definitions:

Successful Formulation

The process of effectively creating or devising plans, strategies, or products that achieve desired outcomes or objectives.

Compensation Strategy

A plan or approach developed by an organization to determine how to use compensation and benefits effectively to attract, retain, and motivate employees.

Job Evaluations

The systematic process of determining the relative worth of jobs within an organization in order to establish a fair and equitable wage and salary structure.

Appeal Mechanisms

Formal processes within organizations that allow employees to contest decisions or policies that they feel negatively affect them.