Geoff Whitman, a portfolio analyst for Adams Trust Company, manages the account of Carol Cochran, a client.
Whitman is paid a salary by his employer, and Cochran pays the trust company a standard fee based on the
market value of assets in her portfolio. Cochran proposes to Whitman that "any year that my portfolio achieves
at least a 15% return before taxes, you and your wife can fly to Monaco at my expense and use my
condominium during the third week of January."
What are the problems this proposal creates? Are there any circumstances that would allow Whitman to accept
this?
Sample Solution