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The Landscape of Risk

  Author: Tim Edwards, Craig J. Lazzara ( S&P Dow Jones Indices )
 December, 2014
  Price: FREE

Abstract:

J.P. Morgan famously remarked, when asked what the stock market would do, that “it will fluctuate.” It was a safe prediction. No matter how we regulated or managed our markets, spikes in volatility persisted. From a classical point of view, higher volatility presents greater opportunities—the canonical example being the increases in both risk and return that result from the application of leverage. Thus, by implication in the typical legal disclaimer, an increased opportunity for return is associated with increased risk.
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