Why High-Risk Cause High Gain
Subject: Management Paper 1
There are many myths and facts about investing. Some pseudo facts are that, high
return investments are risky and low risk investments are safe. the reality is, there isn’t any
exact curve that’ll give risks as a function of return. Low return investments are often very
risky too when fraud happens, for instance.
However, the pseudo incontrovertible fact that risk correlates with return have some
truth in it. you would like to know what causes it.
Money doesn’t make money. People make money. somebody else will need to work
thereon money therefore the money can produce extra money. Let’s call those people
workers. Workers here include CEOs, Entrepreneurs, all the thanks to blue collar workers.
Those workers organize various resources, including your money and themselves to
maximise their yield.
How much each worker gets depend upon supply and demand. Currently, thanks to
centuries of prosecution and genocide, folks that are risk taking enough to be entrepreneurs,
or like to learn enough to be CEOs are underrepresented within the gene pool.
The market values the rare. So entrepreneurs and CEOs tend to urge paid way higher
salary than blue collar workers, which are often investors. The commies, realizing that,
switches side by supporting the interests of capital owners against workers’ interest by
demanding lower CEOs salary.
Here, investors are those that just put their money and do nothing else for the
business. If you invest in your business then you're both investors and workers. Your return
