Waiting for answer This question has not been answered yet. You can hire a professional tutor to get the answer.

QUESTION

There is evidence that CEO compensation follows a quot;power lawquot; with respect to size of firm:

There is evidence that CEO compensation follows a "power law" with respect to size of firm: , where is total CEO compensation inclusive of stock options and  is measured by, say, stock market valuation or total assets. There is strong evidence that  is approximately equal to 1/3. 

Suppose that is 500 so that we have

(1)

when

  • is measured in millions of dollars, and
  • is total firm assets measured in billions of dollars

           A. Use equation (1) to calculate  for a firm with total assets of 4 billion dollars. Then calculate the simple proportional change in  when  increases from 4 billion to 6 billion dollars. In calculating values of  and the simple proportional change, feel free to round your answers to three decimal places.

Show more
LEARN MORE EFFECTIVELY AND GET BETTER GRADES!
Ask a Question