Compared to owners,employees receive a large fraction of their incomes from their employers and are consequently dependent on the fortunes of that company in the marketplace.From a 'risk-sharing' perspective,an employee tends to prefer:
A)a flat salary.
B)output-based incentive pay.
C)year-end based performance pay.
D)commission-based incentive pay.

Question

Quizplus · Accepted Answer

Employees who receive a flat salary are not directly influenced by the company's performance and are not as dependent on the company's financial success. This type of pay provides a stable income regardless of the company's market position, which is preferred for risk-sharing purposes. Output-based incentive pay, year-end based performance pay, and commission-based incentive pay all tie an employee's pay directly to the company's performance and can be riskier options for employees.

Compared to Owners,employees Receive a Large Fraction of Their Incomes