An Investor Has the Opportunity to Buy a $10,000 Government

question 105

Multiple Choice

An investor has the opportunity to buy a $10,000 government bond which is guaranteed to yield 6.5% interest in one year's time. The investor decides to make the investment as there is a net difference between the absolute cost and benefit. Which of the following is NOT a reason that the investor's decision may be flawed?

• A) It does not consider the current market interest rate.
• B) It does not consider the fact that though costs are incurred today, the benefits occur in one year's time.
• C) It does not consider the value of the $10,000 in one year's time if invested elsewhere.
• D) It does not consider whether the $10,000 will be needed elsewhere.

---

Definitions:

Contingent Reward

A leadership strategy where rewards or punishments are given based on the performance of the followers.

Management By Exception

A management strategy where leaders intervene only when necessary, mainly when there are deviations from expected outcomes; it emphasizes autonomy in the regular tasks.

Positive Reinforcement

A technique in behavior analysis that involves the addition of a stimulus following a desired behavior, increasing the likelihood of that behavior occurring again.

Negative Reinforcement

A behavioral concept where the removal of an unpleasant stimulus strengthens a desired behavior.