Rearden Metal Has No Debt,and Maintains a Policy of Holding

question 61

Multiple Choice

Rearden Metal has no debt,and maintains a policy of holding $50 million in excess cash reserves,invested in risk free treasury securities currently yielding 4%.If Rearden is in the 40% marginal tax bracket,the cost of permanently maintaining this $50 million reserve is closest to:

• A)$0.8 million
• B)$1.2 million
• C)$20.0 million
• D)$30.0 million

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Definitions:

Social Dominance Theory

A theory that suggests societies are structured in hierarchical groupings, and biases and inequality stem from this social stratification.

Social Hierarchy

The ranking or grading of individuals and groups in any given society, often based on factors like power, wealth, or social status.

Groupthink

A psychological phenomenon where the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives.

Power Distance

The extent to which less powerful members of institutions and organizations accept and expect that power is distributed unequally.