Risk encompasses the good, the bad, and everything in between. Everyone must accept some risk, but financial markets can help you to manage it. Nobody wants to wreck a car or lose savings during a stock market crash. Yet, people rejoice when they hit all the green lights or ride a rally. Rationally assessing, pricing, and trading risk are key functions of financial markets and institutions.
Speaking of Risk, It’s Everywhere
Risk, which includes positive gains and negative losses, pervades all. Investors want the rewards but not the losses, but the two cannot be separated. Investors assume risk in exchange for commensurate reward. If you’ve ever purchased insurance; if you ever worked for a brothel or became an economics and business ...
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