Determine the better option for investor

Assignment Help Finance Basics
Reference no: EM1339876

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.

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

Reference no: EM1339876

Questions Cloud

Assume the usa also canada are considering to trade : Assume the USA and Canada are considering to trade. Assume there are only two goods in the economy: potatoes and rice. The table below illustrates what each country can produce in a given year.
Concept of social loafing : Describe the concept of "social loafing" or "soldiering" as it relates to worker productivity and property ownership.
Define why a change in amino acid sequence might affect : define why a change in amino acid sequence might affect
Explain american recovery and reinvestment act 2009 : Explain American Recovery and Reinvestment Act 2009 and How the Tax Shield could help a business who is about to close their doors gain control over their debt financing
Determine the better option for investor : 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. Determine the better option for investor.
Evaluating independent and investment opportunities : Jackson Corporation is evaluating the following four independent, investment opportunities.
English common law shaping colonial market system : Describe how English common law shaped the colonial market system and commerce in general.
Explain senior executives and contract management : Explain Senior executives and contract management and How do senior executives play an essential role in contract management
Explain what would be the general genetic term : explain What would be the general genetic Term

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Budget fluctuations be anticipated

Should all or most budget fluctuations be anticipated.

  Xyz corporation-managerial finance

XYZ Corporation has $4 million in earnings after taxes and 1 million shares outstanding. Compute the current price of the stock. What will the new earnings per share be? (Round to two places to the right of the decimal.)

  Objective type questions on leverage analysis

Objective type questions on leverage analysis also the company bases its sensitivity analysis on the expected case scenario

  Computation of current share price

Computation of current share price and If the required rate on this stock is 10% what is the current share price

  Retirement plans

How much will Jane have in her retirement account immediately after she makes her last contribution in Year 40, assuming a return on her investments of 9%?

  Perform calculations

For those Assignments in this course that require you to perform calculations you must: Create an Excel spreadsheet containing the information provided.  Template in Word is provided. Show all your work.

  Future value and present value

Need help with the following. Can you please show me how to answer the questions at the end of this reading for future value and present value. How much will tuition and living expenses be per year when Brady is ready to attend? Give an answer for ea..

  Calculation of stock price and required rate of return

Calculation of stock price and required rate of return and What is the required rate of return

  Computation of no odd days to pay its suppliesrs

Computation of no odd days to pay its suppliesrs and the cost of goods sold is equivalent to 65% of sales

  Calculate the revised portfolio beta riskiest beta

Calculate the Revised Portfolio beta riskiest beta replaced by risky fewer betas and who believes the economy is slowing down

  Optimal capital structure for time warner

Discuss the optimal capital structure for Time Warner in light of current, business, economic, and industry trends.

  Finding future or present value of bill shaffer

Bill Shaffer wishes to have $200,000 in a retirement fund 20 years from now. He can create the retirement fund by making a single lump sum deposit today. What is the maximum annual withdrawal he can make over the following 15 years?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd