Abstract
Since no bank, let alone any individual, possesses any method for objectively assessing the magnitudes of any of the risks, as discussed in the previous chapter, all bank investment and funding activities inevitably involve subjective decision-taking. Nevertheless, an analysis of objective risk provides us with a useful framework for organising our thinking about its subjective counterpart. To appreciate this, let us consider the following hypothetical situation. A banker is faced with the possibility of making an investment with known probabilities as to the possible outcomes. The information available to him is summarised in Table 2.1.
Keywords
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Author information
Authors and Affiliations
Copyright information
© 1992 George McKenzie and Stephen Thomas
About this chapter
Cite this chapter
McKenzie, G., Thomas, S. (1992). Objective Risk Assessment. In: Financial Instability and the International Debt Problem. Southampton Series in International Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-21730-4_2
Download citation
DOI: https://doi.org/10.1007/978-1-349-21730-4_2
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-21732-8
Online ISBN: 978-1-349-21730-4
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)