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How are mutual fund managers compensated

by | Dec 2, 2023 | Posted Questions

How are mutual fund managers compensated?

A mutual fund announces that the salaries of its fund
managers will depend on the performance of the fund. If the fund loses money,
the salaries will be zero. 
If the fund makes a profit, the salaries will be
proportional to the profit. 
Describe the salary of a fund manager as an option. 
How is a fund manager motivated to behave with this type of remuneration
package?

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