Compensation Policies Are Externally Equitable When Employees Believe That the Wage

question 121

True/False

Compensation policies are externally equitable when employees believe that the wage rates for their jobs approximate the job's worth to the organization.

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Definitions:

Unsystematic Risk

The risk associated with a specific company or industry, also known as "diversifiable risk" or "idiosyncratic risk."

Expected Risk Premium

The additional return over the risk-free rate that investors demand to compensate for the risk of holding a risky asset.

Systematic Risk Principle

The concept that an investor can reduce the overall risk of an investment portfolio through diversification, except for inherent market risks that cannot be diversified away.

Efficient Markets Hypothesis

The efficient markets hypothesis is an investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.