Kenneth Arrow Quotes About Security

• The trouble is that the risks that are being hedged very well by new financial securities are financial risks. And it appears to me that the real things you want to hedge are real risks, for example, risks in innovation. The fact is that you'd like companies to be able to take bigger chances. Presumably one obstacle to successful R&D, particularly when the costs are large, are the risks involved.

  Kenneth Arrow

  Real, Successful, Risk

  Source: www.minneapolisfed.org

• I am not really inclined to think there is any very effective regulation of the derivative securities markets that would be useful. People who go into it essentially ought to know what risks they're taking and I don't see any useful regulation.

  Kenneth Arrow

  Pensamiento, Personas, Riesgo

  Source: www.minneapolisfed.org

• There is a bit of a problem with the match between derivative securities markets and the primary markets. We have long ago instituted principles, essentially high margin requirements, to prevent certain instabilities in the stock market, and I think they're basically correct. The trouble is that there's a linkage, let's say, between something like the stock market and the index futures markets, and the fact that the margin requirements are very different, for example, played some role in the October '87 crash.

  Kenneth Arrow

  Thinking, Long Ago, Requirements

  Source: www.minneapolisfed.org

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