Re: Peter Bernstein

From: DAX
Affiliation:
Address:
Date: 15 May 2007
Time: 10:23:46

Comments

I am trying to figure out Bernstein's comment "If only a finite number of things could happen, risk would not exist." At first I thought he might have meant that there was no risk because we could build a replicating portfolio to hedge against all the possibilities, but that can't be right. Just because there are finitely many possible outcomes doesn't mean we know what they are. Also, the market may not be complete, so replicating portfolios won't always be constructable. I think he misspoke.

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