C3E: Quantitative Principles in Compensation
Management Quiz with Correct ANSWERs
What is your compa-ratio for accounting clerks? What is your market index?
(A) .928 compa, .987 market
(B) .928 compa, 1.064 market
(C) .987 compa, 1.064 market
(D) .987 compa, 1.013 market - ANSWER -(A) .928 compa, .987 market
compa = salary/midpoint 1,550/1,670 = .928 market
index = 1,550/1,570 = .987
An executive is hired at 80,000/yr. His is guaranteed a 6,000 salary increase after
6 months. What % increase is that?
(A) 6.0%
(B) 6.5%
(C) 7.0%
(D) 7.5% - ANSWER -(D) 7.5%
6,000/80,000 = 7.5%
Suppose you were given the following data for salary grade 007: Min 4,800
Midpoint 6,000 Max 7,200 What is the salary range spread?
(A) 35%
(B) 37.5%
(C) 40%
(D) 50% - ANSWER -(D) 50%
salary range spread = max-min/min
7,200-4,800/ 4,800
2,400/4,800 = 50%
,If the midpoint is 2,000 and the desired range spread is 50%, what are the min and
max values?
(A) 1,500 min; 2,500 max
(B) 1,600 min; 2,400 max
(C) 1,700 min; 2,300 max
(D) 1,750 min; 2,250 max - ANSWER -(B) 1,600 min; 2,400 max
min = midpoint/ 1 + (desired range spread/2)
= 2,000/ 1+ (.50/2) = 2,000/1.25 = 1,600
max = min * (1 + desired range spread)
= 1,600 * (1+.50)
= 1,600 * 1.50 = 2,400
If the minimum is 2,000 and the desired range spread is 40%, what is the
midpoint?
(A) 2,000
(B) 2,300
(C) 2,400
(D) 2,800 - ANSWER -(C) 2,400
2,000 * 1.40 = 2,800
2,000 + 2,800 = 4,800 /2 = 2,400
Midpoint for grade 14 is 950, and the max is 1,200. Assuming that the structure is
symmetric, what is the range spread? (rounded)
(A) 21%
(B) 26%
(C) 52%
(D) 71% - ANSWER -(D) 71%
, min = mid - (max-mid)
= 950 - (1,200-950)
= 950-250 = 700
range spread = max-min/min
= 1,200-700/700
= 500/700 = 71%
Which of the following should be used to determine the amount of interest earned
on money over a specified period of time?
(A) Percent difference
(B) Percent adjustment
(C) Compound interest
(D) Compa-ratio - ANSWER -(C) Compound interest
How much interest will you earn on 2,500 in three years, if the interest rate is 6%,
and the interest is compounded annually?
(A) 309
(B) 477.54
(C) 489.05
(D) 977.54 - ANSWER -(B) 477.54
You start with 1,800 in your savings account. You do not make any deposits or
withdrawals and earn 10% interest, compounded quarterly. How much money will
you have in your account after five years?
(A) 1,149.51
(B) 2,674.71
(C) 2,898.92
(D) 2,949.51 - ANSWER -(D) 2,949.51
Formula = FV(.025,20,0,-1800)
Management Quiz with Correct ANSWERs
What is your compa-ratio for accounting clerks? What is your market index?
(A) .928 compa, .987 market
(B) .928 compa, 1.064 market
(C) .987 compa, 1.064 market
(D) .987 compa, 1.013 market - ANSWER -(A) .928 compa, .987 market
compa = salary/midpoint 1,550/1,670 = .928 market
index = 1,550/1,570 = .987
An executive is hired at 80,000/yr. His is guaranteed a 6,000 salary increase after
6 months. What % increase is that?
(A) 6.0%
(B) 6.5%
(C) 7.0%
(D) 7.5% - ANSWER -(D) 7.5%
6,000/80,000 = 7.5%
Suppose you were given the following data for salary grade 007: Min 4,800
Midpoint 6,000 Max 7,200 What is the salary range spread?
(A) 35%
(B) 37.5%
(C) 40%
(D) 50% - ANSWER -(D) 50%
salary range spread = max-min/min
7,200-4,800/ 4,800
2,400/4,800 = 50%
,If the midpoint is 2,000 and the desired range spread is 50%, what are the min and
max values?
(A) 1,500 min; 2,500 max
(B) 1,600 min; 2,400 max
(C) 1,700 min; 2,300 max
(D) 1,750 min; 2,250 max - ANSWER -(B) 1,600 min; 2,400 max
min = midpoint/ 1 + (desired range spread/2)
= 2,000/ 1+ (.50/2) = 2,000/1.25 = 1,600
max = min * (1 + desired range spread)
= 1,600 * (1+.50)
= 1,600 * 1.50 = 2,400
If the minimum is 2,000 and the desired range spread is 40%, what is the
midpoint?
(A) 2,000
(B) 2,300
(C) 2,400
(D) 2,800 - ANSWER -(C) 2,400
2,000 * 1.40 = 2,800
2,000 + 2,800 = 4,800 /2 = 2,400
Midpoint for grade 14 is 950, and the max is 1,200. Assuming that the structure is
symmetric, what is the range spread? (rounded)
(A) 21%
(B) 26%
(C) 52%
(D) 71% - ANSWER -(D) 71%
, min = mid - (max-mid)
= 950 - (1,200-950)
= 950-250 = 700
range spread = max-min/min
= 1,200-700/700
= 500/700 = 71%
Which of the following should be used to determine the amount of interest earned
on money over a specified period of time?
(A) Percent difference
(B) Percent adjustment
(C) Compound interest
(D) Compa-ratio - ANSWER -(C) Compound interest
How much interest will you earn on 2,500 in three years, if the interest rate is 6%,
and the interest is compounded annually?
(A) 309
(B) 477.54
(C) 489.05
(D) 977.54 - ANSWER -(B) 477.54
You start with 1,800 in your savings account. You do not make any deposits or
withdrawals and earn 10% interest, compounded quarterly. How much money will
you have in your account after five years?
(A) 1,149.51
(B) 2,674.71
(C) 2,898.92
(D) 2,949.51 - ANSWER -(D) 2,949.51
Formula = FV(.025,20,0,-1800)
