Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Explain Promoters’ and Managers’ Compensation?
Expert Solution
Step 1
Promoters are the individuals or firms who perform all the responsibilities in setting up the companies and take care of all the legal responsibilities that are needed to follow by the company. In lieu of that services taken by the company, it pays compensation to the promoters in the form of the shares that are not subscribed to the normal investors. Promoters after a certain time can sell these shares back to the company when the company gets well established.
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