Risk Aversion by Managers Should Be Recognized When Revising Compensation

question 17

Multiple Choice

Risk aversion by managers should be recognized when revising compensation plans because:

• A) Compensation mix (salary, bonus) can influence a manager's risk aversion.
• B) Most companies want risk averse managers.
• C) Most companies want risk taking managers.
• D) It costs less to pay risk averse managers.

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Definitions:

Blood Vessel Inflammation

A condition also known as vasculitis, involving the swelling and irritation of the blood vessels, which can restrict blood flow and lead to various health problems.

Chronic Stress

A continuous state of emotional pressure and distress occurring over a prolonged period, capable of affecting an individual’s physical and mental health.

Heart Disease

A broad term for conditions affecting the heart or blood vessels, often associated with plaque buildup in arterial walls, leading to heart attacks or strokes.

High Blood Pressure

A condition where the force of the blood against the artery walls is too high, often leading to heart disease.