What would be the impact if all risks of financial loss

Reference no: EM133714371

Question 1: What would be the impact if all risks of financial loss or failure were legislatively eliminated from our economy? What if that potential loss was limited to 10% of your wealth and anything beyond that was "socialized" or spread among all citizens? Would the inherent greater risk-taking be better or worse for the overall economy?

Question 2: Presume you are investing your life savings in one stock. If there is a 50% chance that the stock would be worthless in one year, what rate of return would you require to buy that stock? How would that be different if you only risked half of your life savings? How would that required rate of return be different if you were buying the stock on behalf of you and nine friends, and each of you only risked losing 10% of your life savings?

Reference no: EM133714371

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