Suppose After Graduating from College You Get a Job Working

question 29

Multiple Choice

Suppose after graduating from college you get a job working at a bank earning $30,000 per year.After two years of working at the bank earning the same salary,you have an opportunity to enroll in a one-year graduate program that would require you to quit your job at the bank.Which of the following should not be included in a calculation of your opportunity cost?

• A)the cost of tuition and books to attend the graduate program
• B)the $30,000 salary that you could have earned if you retained your job at the bank
• C)the $45,000 salary that you will be able to earn after having completed your graduate program
• D)the value of insurance coverage and other employee benefits you would have received if you retained your job at the bank

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Definitions:

Risk Neutral

A condition or attitude where an individual or entity is indifferent to risk when making investment or economic decisions, focusing solely on potential outcomes without regard to the associated risks.

Insurance

A financial product that provides compensation or coverage against losses or damages, based on the principle of risk pooling and premiums paid by the insured parties.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1 where 1 indicates certainty.

Big-8 Accounting Firm

Refers to the top eight accounting firms in the United States that dominated the industry until mergers and scandals reduced the number to the Big Four.