Adoption of a conservation of risk framework greatly increases investor/manager awareness of the trade-offs in risk and uncertainty that are at the heart of investing.
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| A SQUARE :: 07Dec08 Conservation of risk as a concept |
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Category
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Risk
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Author
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Sona Blessing
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Actually, the efficient market hypothesis suggests a kind of risk conservation law; except that it assumes (mistakenly) that the "market" is a closed system. In fact, information and risk flow into and out of the market all the time.
These are what we now call "alternative risk premia".
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