Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

If a manager receives part of their salary based on how the portfolios they manage are performing then the manager would want to see his or her portfolio have a high return. The money manager might take extra risks that the client may not have normally wanted just so he or she can make extra money for themselves. One way to keep the manager acting in a professional way is to make sure that every trade that is done has written permission from the client. This way the client will know exactly what is being done in the account plus the company will have written proof that the client wanted the transaction done.

Money management has risks for both the investor and the manager of the fund. A risk the investor had to keep in mind is not only can they lose money on their investments, but the will also have to pay management fees. Management fees are the compensation an investment company pays to the investment management company for it services (Reilly & Brown 2012). This could be a large amount depending on how much money the investor has invested with the manager. There is really no way to avoid paying these fees but the investor could work with the company to get a better rate. The manager has to remain honest when they are dealing with their client's money. A good way to make sure this happens is to have surprise audits of the accounts. This way the manger can't hide anything because they know an audit is coming up.

problem: Is it better for an investor to pay a fixed fee (or percentage of assets) for the manager's services?

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M924407

Have any Question? 


Related Questions in Basic Finance

1 discuss the differences between foreign trade and foreign

1. Discuss the differences between foreign trade and foreign direct investment. 2. Identify some of the competitive threats of RDEs. 3. Discuss the ethics of outsourcing to other countries where the wages are less than o ...

Drozshiking gear company has found that its common equity

Droz'sHiking Gear Company has found that its common equity shares have a beta equal to 1.50 while the risk-free return is 12 percent and the market risk premium is 6 percent. It has 10-year bonds outstanding with a marke ...

In the summer of 2008 at heathrow airport in london

In the summer of 2008, at Heathrow airport in London, Bestofthebest (BB), a private company, offered a lottery to win a Ferrari or 108 comma 000British pounds, equivalent at the time to about $ 216 comma 000. Both the Fe ...

1 discuss the differences between the following types of

1. Discuss the differences between the following types of mergers: a. Horizontal mergers b. Vertical mergers c. Conglomerate mergers 2. What are some of the reasons why firms merge with other firms? 3. What methods do fi ...

You have to make a balloon payment on your house five years

You have to make a balloon payment on your house five years from now of $15,000. If money can earn an average of 6 percent a year for the five-year period, what factor will you use to determine what to deposit now?

1 do not-for-profit organizations other than governments

1. Do not-for-profit organizations, other than governments, use fund accounting? Comment. 2. The accounting for governments is centered on the entity concept and the efficiency of the entity. Comment 3. For governmental ...

Assume the following year zero capital investment 6m and

Assume the following: Year Zero: Capital Investment = $6M and Increase in NWC = $.5M; Years 1-4: OCF = $4M; Year 4: Recovery of Earlier Increase in NWC and Cash Flow from Salvage = $2.5M. What are the incremental cash fl ...

Who are the players in the government sector what is the

Who are the players in the government sector? What is the distinction between a government-owned corporation and a government-sponsored enterprise? What is the distinction between a depository financial institution and a ...

In addition to the key words you should be able to define

In addition to the key words, you should be able to define each of the following terms: literature search subject words database abstract PsycINFO PsycArticles title introduction method section results section discussion ...

The stock of bruin inc has an expected return of 22 percent

The stock of Bruin, Inc., has an expected return of 22 percent and a standard deviation of 35 percent. The stock of Wildcat Co. has an expected return of 14 percent and a standard deviation of 40 percent. The correlation ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro