Timeline for Is there a term for the risk of investing in an asset with a positive but inferior return?
Current License: CC BY-SA 3.0
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| Nov 25, 2013 at 21:59 | comment | added | Matthew Flaschen | Thanks, @ChrisW.Rea. I think that definitely covers a major aspect of it. In fact, opportunity risk may just be an extreme case of illiquidity risk (if the asset were fully liquid, you could switch to the better opportunity). | |
| Nov 24, 2013 at 4:18 | comment | added | Chris W. Rea | If by "commitment" you mean locking in (as opposed to just a current choice) then I'd also suggest "illiquidity risk", i.e. can't get out of the poorer-performing investment to switch to the better one. | |
| Nov 24, 2013 at 2:44 | comment | added | Matthew Flaschen | This is a good overall explanation. However, my question wasn't specific to this particular low-risk asset. I just chose that as a simple example. The question applies anytime you make a commitment to an investment (even if that happens to be a subprime mortgage bond), then find a better one later. | |
| Nov 22, 2013 at 15:53 | comment | added | JTP - Apologise to Monica♦ | Nice. The "Risk-free Rate" is always going to seem low compared to what one might hope for. By definition, higher returns require higher risk. | |
| Nov 22, 2013 at 15:47 | history | edited | Chris W. Rea | CC BY-SA 3.0 |
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| Nov 22, 2013 at 15:29 | history | edited | Chris W. Rea | CC BY-SA 3.0 |
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| Nov 22, 2013 at 15:23 | history | answered | Chris W. Rea | CC BY-SA 3.0 |