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- Title
Brokerage Commission Schedules.
- Authors
Brennan, Michael J.; Chordia, Tarun
- Abstract
It is generally optimal for risk-sharing reasons to base a charge for information on the signal realization. When this is not possible, a charge based on the amount of trading, a brokerage commission, may be a good alternative. The optimal brokerage commission schedule is derived for a risk-neutral information seller faced with risk-averse purchasers who may differ in their risk aversion. Revenues from the brokerage commission are compared with those from a fixed charge for information and the optimal mutual fund management fee.
- Subjects
STOCKBROKERS; PROFESSIONAL fees; MUTUAL funds; FIXED prices; MATHEMATICAL models of finance; FINANCIAL markets; FINANCE of information services; WAGES; INFORMATION services industry; RISK sharing; RISK aversion
- Publication
Journal of Finance (Wiley-Blackwell), 1993, Vol 48, Issue 4, p1379
- ISSN
0022-1082
- Publication type
Article
- DOI
10.1111/j.1540-6261.1993.tb04758.x