Asked by Taylor Donohue on Sep 24, 2024

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​To better align your agent's incentives to your own when buying securities

A) ​Offer the agent a high price
B) Offer the agent a low price
C) Offer the agent a price based on performance of the security
D) ​All of the above

Agent's Incentives

The rewards, financial or otherwise, that motivate an agent, such as an employee or representative, to act in the principal's (such as an employer or company) best interests.

Buying Securities

The act of purchasing financial instruments such as stocks, bonds, and mutual funds with the intention of generating returns.

Offer

A proposal by one party to enter into a contract with another party, specifying the terms by which they are willing to engage in a transaction.

  • Understand the concept of expected value and its application in decision-making.
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MUSTUFA SHADAN3 days ago
Final Answer :
C
Explanation :
Offering the agent a price based on the performance of the security will align their incentives with your own because if the security does well, they will earn more. This encourages them to make well-informed investment decisions. Offering a high or low price may not necessarily align their incentives with yours, as they may still prioritize their own profit over your investment goals.