(a) Hedge funds earn a management fee plus an incentive fee that is a percentage of the
Chapter 16, Problem 16.17(choose chapter or problem)
(a) Hedge funds earn a management fee plus an incentive fee that is a percentage of the profits, if any, that they generate (see Business Snapshot 1.3). How is a fund manager motivated to behave with this type of compensation package? (b) Granting options to an executive gives the executive the same type of compensation package as a hedge fund manager and motivates him or her to behave in the same way as a hedge fund manager. Discuss this statement.
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