Briefly Describe the Three Main Categories of Performance Pay,and Provide

question 23

Essay

Briefly describe the three main categories of performance pay,and provide examples for each category.

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Definitions:

Treasury Bills

Short-term government securities issued at a discount from the par value and pay no interest.

Market Portfolio

A theoretical portfolio that contains every asset in the market, weighted by market capitalization.

Security Market Line

A graphical representation of the expected return of investments as a function of their risk, specifically their beta.

Expected Return

The average of all the possible returns for an investment, weighted by their respective probabilities.