3 ms·
a) what profit is "necessary"? a business's goal is to maximize profit. b) risk premiums exist in every form of economics. it's why, typically, stocks return m
by listenallyall 3y ago
a) what profit is "necessary"? a business's goal is to maximize profit.
b) risk premiums exist in every form of economics. it's why, typically, stocks return more than bonds over time, for example. Why would regulators be interested in auditing companies for acting rationally?
- xcv123 3y agoNecessary to cover increased costs and manage actual risk. Where there is a lack of competition or opportunity for collusion companies can and do exploit the situation rationally. Just because it is rational doesn't make it legal or ethical.
- listenallyall 3y agoA minute ago you dismissed the concept of a risk premium and claimed regulators needed to step in. Now it's ok for businesses to manage actual risk?
- xcv123 3y agoWhy is this so difficult for you to understand? This is not complicated. I am not dismissing the concept of a risk premium. I am saying they can exploit the concept of a risk premium to justify an excessive increase in prices, beyond what is reasonable. Companies can collude to set higher prices and blame inflation. Antitrust laws and regulations exist for a reason. Companies have been cheating since the beginning of the history of companies.
- listenallyall 3y ago> I am not dismissing the concept of a risk premium You wrote: disguised as a "risk premium" Saying something is just a disguise for something else and, for additional emphasis, putting air quotes around it is an unmistakable dismissal of the concept. Hard to imagine how you could have been more clear.
- xcv123 3y agoSo there is a risk premium, and then there is a "risk premium". Neither is a dismissal of the concept itself. It's about the intentions of the companies.