Refer to Table 8

question 28

Multiple Choice

$$\begin{array}{l}\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Antonio's Nominal } \\\text { Hourly Wage }\end{array} & \begin{array} { c } \text { Consumer Price } \\\text { Index }\end{array} \\\hline 2006 & \$ 8.40 & 201.6 \\\hline 2010 & \$ 9.05 & 218.1 \\\hline\end{array}\\\text { Table } 8.2\end{array}$$ Refer to Table 8.2.From 2006 to 2010,Antonio received a total of $0.65 in pay raises,and the CPI also increased as shown in the table.What happened to Antonio's real wage from 2006 to 2010?

• A) It rose because $9.05 is greater than $8.40.
• B) It rose because Antonio's nominal wage and the CPI were both higher in 2010 than in 2006.
• C) It fell because Antonio's nominal wage rose more slowly than did the CPI.
• D) It fell because the change in the CPI was 16.5, which is greater than Antonio's wage.

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Definitions:

Constant-Growth DDM

A dividend discount model that assumes dividends grow at a constant rate in perpetuity, used to estimate the value of a stock.

Beta

A measure of a stock's volatility in relation to the overall market, indicating the stock's risk compared to the market average.

CAPM

Capital Asset Pricing Model, a framework used to determine the theoretical expected return of an asset, considering its risk relative to the market.

Dividend

A disbursement by a company to its stockholders, typically from earnings.