(a) Hedge funds earn a management fee plus an incentive fee that is a percentage of the profits (after fees and expenses), if any that they generate. How is a fund manager motivated to behave with this type of compensation package?
(b) "Granting options to an executive gives the executive the same type of compensation package as a hedge fund manager and motivates him or her to behave in the same way as a hedge fund manager" Discuss this statement.