The Equilibrium Hedonic Wage Function Is Most Likely

question 22

Multiple Choice

The equilibrium hedonic wage function is most likely

• A) horizontal as no firm will overpay for workers.
• B) horizontal as firms will choose their optimal level of safety.
• C) a single point, as all firms will choose the same level of risk, and consequently all workers will be paid the same wage.
• D) upward sloping as firms that offer riskier jobs usually pay higher wages.
• E) downward sloping as firms that offer riskier jobs are usually able to pay lower wages.

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Definitions:

Annual Dividend

The total dividend payment a shareholder receives from a company in one year.

Debt-Equity Ratio

A gauge illustrating the mix between shareholder equity and debt in a company’s asset-financing strategy.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, reflecting the expected cost of all available funding sources.

Weight of Preferred Stock

The proportion of preferred stock in a company’s capital structure, used in calculating the cost of capital or investment risk.