When Arthur Heard About Two Line Workers in Another Department

question 177

Multiple Choice

When Arthur heard about two line workers in another department being fired after a disagreement with their manager, he decided it was time to join the union: "I have a family to feed, and I can't risk losing my job because some manager has a bad day." Arthur's reason for joining a union is to

• A) combat alienation.
• B) increase job security.
• C) correct perceived deficiencies.
• D) increase his salary.
• E) reinforce his family's support for the union.

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Definitions:

Market Risk Premium

The extra earnings an investor foresees from holding a risky market portfolio in comparison to risk-free assets.

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, typically represented by the yield on government bonds like U.S. Treasury securities.

Semistrong Efficient

A form of market efficiency that states all public information is already calculated into stock prices, and thus, no one can achieve higher returns by trading on that information.

Expected Returns

The anticipated return on an investment, taking into account all known risks and rewards associated with it.