Which of the Following Statements About Commission Systems of Compensation

question 117

Multiple Choice

Which of the following statements about commission systems of compensation is false?

• A)They increase the risk to workers because sometimes output declines for reasons not connected to the worker's effort.
• B)During sluggish periods, an employer's payroll expenses will decline along with sales.
• C)If workers are paid on the basis of the number of units produced, they may become less concerned about quality.
• D)The lack of income stability will induce the more productive workers to leave in search of more secure employment.

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Definitions:

CAPM

Capital Asset Pricing Model, a formula used to determine the expected return on an investment based on its risk relative to the market.

APT Model

Arbitrage Pricing Theory Model; a financial theory that estimates the returns on assets based on their exposure to various risk factors.

One Factor

In finance, refers to models or analyses that consider only a single variable or risk factor in their calculations.

CAPM

The Capital Asset Pricing Model, a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.