博迪_投资学第九版_英文答案(4)

博迪_投资学第九版_英文答案

11. a. A fixed salary means that compensation is (at least in the short run)

independent of the firm's success. This salary structure does not tie the manager’s immediate compensation to the success of the firm. However, the manager might view this as the safest compensation structure and therefore value it more highly.

b. A salary that is paid in the form of stock in the firm means that the manager earns the most when the shareholders’ wealth is maximized. Five years of vesting helps align the interests of the employee with the long-term performance of the firm. This structure is therefore most likely to align the interests of managers and shareholders. If stock compensation is overdone, however, the manager might view it as overly risky since the manager’s career is already linked to the firm, and this undiversified exposure would be exacerbated with a large stock position in the firm.

c. A profit-linked salary creates great incentives for managers to contribute to the firm’s success. However, a manager whose salary is tied to short-term profits will be risk seeking, especially if these short-term profits determine salary or if the

compensation structure does not bear the full cost of the project’s risks. Shareholders, in contrast, bear the losses as well as the gains on the project, and might be less

willing to assume that risk.

12. Even if an individual shareholder could monitor and improve managers’ performance,

and thereby increase the value of the firm, the payoff would be small, since the

ownership share in a large corporation would be very small. For example, if you own $10,000 of Ford stock and can increase the value of the firm by 5%, a very ambitious goal, you benefit by only: 0.05 × $10,000 = $500

In contrast, a bank that has a multimillion-dollar loan outstanding to the firm has a big stake in making sure that the firm can repay the loan. It is clearly worthwhile for the bank to spend considerable resources to monitor the firm.

13. Mutual funds accept funds from small investors and invest, on behalf of these

investors, in the national and international securities markets.

Pension funds accept funds and then invest, on behalf of current and future retirees, thereby channeling funds from one sector of the economy to another.

Venture capital firms pool the funds of private investors and invest in start-up firms. Banks accept deposits from customers and loan those funds to businesses, or use the funds to buy securities of large corporations.

Treasury bills serve a purpose for investors who prefer a low-risk investment.

The lower average rate of return compared to stocks is the price investors pay

for predictability of investment performance and portfolio value. 14.