RMI 2302 LATEST 2026 TEST PAPER QUESTIONS AND
SOLUTIONS GUARANTEE A+
✔✔The portion of household income that is NOT paid in taxes or used to purchase
goods is: - ✔✔personal savings
✔✔Sue is a very bright college student who stays up to date on all the news channels.
In response to the number of child abductions she has seen on the news lately, she
insists that her mother purchase a child harness for her younger brother. What type of
bias is this? - ✔✔media
✔✔Bill's Bookstore needs to restock textbooks for the upcoming semester. Bill, the
owner, decides to offer a monetary bonus based on how many books an individual
restocks. 10 textbooks = $1 bonus. This is an example of a(n): - ✔✔incentive
✔✔Politicians seeking re-election today:
Tend to focus on short term outcomes
Generally see spending today as more important than protecting cashflows for future
generations
Make decisions based on reducing the national debt - ✔✔Tend to focus on short-term
outcomes and Generally see spending today as more important than protecting
cashflows for future generations
✔✔Political incentives often do what to the discount rate? - ✔✔Political incentives often
increase the discount rate.
✔✔When considering age bias, older generations tend to _________________ younger
generations. - ✔✔take less risks than.
✔✔Individuals and organizations measure risk/return with expected utility. - ✔✔false.
✔✔What motivates an individual to make perform an action? - ✔✔incentives.
✔✔At which level are incentives found? - ✔✔Individual, organizational, and societal
✔✔As discount rates become higher: - ✔✔Long term cash flows are less valuable
✔✔Which entity is most likely to take additional risk without regard to the amount of
reward associated with it? - ✔✔Governments
✔✔A company has noticed employees taking a lot of sick time off around the flu
season. They are concerned with the overall health of their employees and don't want
them to catch/spread the flu. The company begins offering free flu shots for the
, employee and up to 4 family members. This is an example of: - ✔✔Organizational level
incentives
✔✔Which of the following is not a main bias we encounter when developing models? -
✔✔location bias
✔✔Proper decision making implies entities willing to accept additional risk should be -
✔✔compensated
✔✔Which of the following is a way organizations utilize opportunity cost in their
calculations? - ✔✔Discounting
✔✔What field basically studies incentive systems? - ✔✔Economics
✔✔People who have experienced a low-probability/high-consequences event tend to
overestimate its likelihood. What type of bias does this describe? - ✔✔Experience bias
✔✔The skill of critical decision making requires an understanding of: - ✔✔the trade-off
between risk and reward
✔✔It is not easy to determine what additional reward is necessary for governments or
society to take additional risk because: - ✔✔sometimes governments are the only entity
with the ability to take certain risks
✔✔Cole's Consulting Consortium (CCC) has two clients requesting service, but they
only have enough resources to fulfill one of the requests. Client 1 is willing to pay
$75,000 today for their services. Client 2 is willing to pay $86,000 for the services, but
only when the services are completed, exactly one year from today. CCC's discount rate
is 13%. What is the present value of Client 2's request (rounded to the nearest penny)?
- ✔✔FVn=PV X(1+R)^N
86000=PV X(1+0.13)^1
86000/1.13=
$76106.19
✔✔Cole's Consulting Consortium (CCC) signed a contract to deliver work one year from
today. When the work is delivered, they will receive payment of $1,000,000 for services
rendered. How much is that contract worth in today's dollars if CCC has a discount rate
of 10% (rounded to the nearest penny)? - ✔✔FVn=PV X(1+R)^N
1,000,000=PV X(1+0.10)^1
1,000,000= PV X(1.10)
1,000,000/1.10=
$90,090.91
SOLUTIONS GUARANTEE A+
✔✔The portion of household income that is NOT paid in taxes or used to purchase
goods is: - ✔✔personal savings
✔✔Sue is a very bright college student who stays up to date on all the news channels.
In response to the number of child abductions she has seen on the news lately, she
insists that her mother purchase a child harness for her younger brother. What type of
bias is this? - ✔✔media
✔✔Bill's Bookstore needs to restock textbooks for the upcoming semester. Bill, the
owner, decides to offer a monetary bonus based on how many books an individual
restocks. 10 textbooks = $1 bonus. This is an example of a(n): - ✔✔incentive
✔✔Politicians seeking re-election today:
Tend to focus on short term outcomes
Generally see spending today as more important than protecting cashflows for future
generations
Make decisions based on reducing the national debt - ✔✔Tend to focus on short-term
outcomes and Generally see spending today as more important than protecting
cashflows for future generations
✔✔Political incentives often do what to the discount rate? - ✔✔Political incentives often
increase the discount rate.
✔✔When considering age bias, older generations tend to _________________ younger
generations. - ✔✔take less risks than.
✔✔Individuals and organizations measure risk/return with expected utility. - ✔✔false.
✔✔What motivates an individual to make perform an action? - ✔✔incentives.
✔✔At which level are incentives found? - ✔✔Individual, organizational, and societal
✔✔As discount rates become higher: - ✔✔Long term cash flows are less valuable
✔✔Which entity is most likely to take additional risk without regard to the amount of
reward associated with it? - ✔✔Governments
✔✔A company has noticed employees taking a lot of sick time off around the flu
season. They are concerned with the overall health of their employees and don't want
them to catch/spread the flu. The company begins offering free flu shots for the
, employee and up to 4 family members. This is an example of: - ✔✔Organizational level
incentives
✔✔Which of the following is not a main bias we encounter when developing models? -
✔✔location bias
✔✔Proper decision making implies entities willing to accept additional risk should be -
✔✔compensated
✔✔Which of the following is a way organizations utilize opportunity cost in their
calculations? - ✔✔Discounting
✔✔What field basically studies incentive systems? - ✔✔Economics
✔✔People who have experienced a low-probability/high-consequences event tend to
overestimate its likelihood. What type of bias does this describe? - ✔✔Experience bias
✔✔The skill of critical decision making requires an understanding of: - ✔✔the trade-off
between risk and reward
✔✔It is not easy to determine what additional reward is necessary for governments or
society to take additional risk because: - ✔✔sometimes governments are the only entity
with the ability to take certain risks
✔✔Cole's Consulting Consortium (CCC) has two clients requesting service, but they
only have enough resources to fulfill one of the requests. Client 1 is willing to pay
$75,000 today for their services. Client 2 is willing to pay $86,000 for the services, but
only when the services are completed, exactly one year from today. CCC's discount rate
is 13%. What is the present value of Client 2's request (rounded to the nearest penny)?
- ✔✔FVn=PV X(1+R)^N
86000=PV X(1+0.13)^1
86000/1.13=
$76106.19
✔✔Cole's Consulting Consortium (CCC) signed a contract to deliver work one year from
today. When the work is delivered, they will receive payment of $1,000,000 for services
rendered. How much is that contract worth in today's dollars if CCC has a discount rate
of 10% (rounded to the nearest penny)? - ✔✔FVn=PV X(1+R)^N
1,000,000=PV X(1+0.10)^1
1,000,000= PV X(1.10)
1,000,000/1.10=
$90,090.91
