> For example, black-scholes which values options requires the concept of a risk-free asset. This isn't really true. The risk-free asset doesn't have to exist,

> For example, black-scholes which values options requires the concept of a risk-free asset. This isn't really true. The risk-free asset doesn't have to exist, we just have to agree on what its value would be. For example if Tesla sold a one-year bond paying 20% interest, and everyone agreed Tesla had a 10% chance of being bankrupt within the year, it's fair to agree the risk-free rate is 10% per year. It's true that if the US government were at risk of defaulting on Treasuries, the market would be a bit of a mess. But it happens in other countries all the time and the markets eventually continue to function without an asset considered risk free.