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Much too simple. Most "risks" have an upside and a downside. In this case, for example, the solar PV system may be working better or worse than the (potential)
by PaulDavisThe1st 3mo ago
Much too simple.
Most "risks" have an upside and a downside. In this case, for example, the solar PV system may be working better or worse than the (potential) buyer initially comes to understand.
We have huge industries based on selling "risk, but with a huge potential upside" to people willing to pay for access to the potential upside. Many of those customers are not interested in low risk in that context.
So "more risk, pay less" is not a hard and fast rule, but depends on what is being purchased, the circumstances of the buyer, and more.
- WalterBright 3mo agoThe Black-Sholes equation is an attempt to calculate risk. Of course, risk is difficult to pin down to a number, and different people will assess risk differently. But that's irrelevant to my point, which was that risk is factored into the price.
- PaulDavisThe1st 3mo agoYou made a very specific claim that more risk == lower price. That isn't true as a general rule, though it may be true much of the time.