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Price Is the Only Rationing Device That Can Be Used

question 133

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Price is the only rationing device that can be used in a modern economy.


Definitions:

Systematic Risk

The inherent risk that affects the entire market or market segment, often referred to as market risk or un-diversifiable risk.

Market Risk

The risk of losses in investments due to factors that affect the overall performance of financial markets.

High Water Mark

A clause in fund management contracts that prevents fund managers from receiving large bonuses for poor performance, ensuring they only earn a performance fee when the fund's value exceeds its previous highest value.

Incentive Fees

Fees paid to a fund manager based on performance, often as a percentage of the investment gains beyond a specified benchmark.

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