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:

Parliamentary Procedure

A collection of guidelines for behavior during meetings ensuring everyone's opinions are considered and decisions can be made clearly without misunderstandings.

Private Deals

Agreements or transactions made confidentially between parties, often without the knowledge or consent of a wider group.

Minority Rights

Legal and moral principles aimed at ensuring that members of societal minority groups receive protection from discrimination and any form of oppression.

Nuances

Subtle differences or distinctions in expression, meaning, or response that are often crucial to understanding complex issues.