Which of the Following Is Likely to Occur When Pay

question 37

Multiple Choice

Which of the following is likely to occur when pay for performance with stronger incentive intensity is replaced with one having a weaker incentive pay?

• A)Greater motivation for employees in sales, executives, and stock brokers
• B)Motivation for high performers to stay with the organization and improve their efficiency
• C)Greater chance for unintended, undesirable behavior driven by pay-linked incentives
• D)Excessive risk-taking for greater premium and compensation
• E)Competitors possibly winning over high performers with stronger incentive intensity

Understand the fundamentals of the Capital Asset Pricing Model (CAPM) including the definition of alpha (α) and beta (β).

Identify and interpret regression parameters in financial analysis, especially beta adjustments and the intercept values.

Grasp the concepts of diversification, systematic risk, and unsystematic risk in portfolio management.

Recognize the use of regression analysis in estimating the index model for stocks.

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Definitions:

Allowance for Doubtful Accounts

An accounting entry known as a contra-asset account that predicts the amount of accounts receivable that might be uncollectible.

Realizable Value

The estimated amount for which an asset can be sold, minus any selling costs, at a given point in time.

Materiality Constraint

An accounting principle that allows for the ignoring of accounting information that would not impact users’ decision-making due to its insignificance.

Factoring Accounts Receivable

The financial practice of selling accounts receivable to a third party at a discount to obtain immediate cash.