EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 1, Problem 18PS
Summary Introduction
To Determine: Wall Street firms traditionally compensated their traders with a share of the trading profits that they generated. Explain the practice might have affected trader’s willingness to assume risk. Determine the agency problem this practice engendered.
Introduction: When traders are compensated with profit it means that their work is appreciated, and they are motivated to reach further targets.
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