portfolios could hedge some of the risk of default by taking positions in futures or options markets for residential real estate …

government risk facing investors in medical innovation. This risk slows down medical innovation because investors must be …&D investors to better share the pipeline risk associated with FDA approval with broader capital markets. Using historical FDA … from offering them. Using various unique data sources, we find that FDA approval risk has a low correlation across drug …

We propose and implement a procedure to dynamically hedge climate change risk. To create our hedge target, we extract … hedge portfolios. We discipline the exercise by using third-party ESG scores of firms to model their climate risk exposures …. We show that this approach yields parsimonious and industry-balanced portfolios that perform well in hedging innovations …

that they would be exposed to risk from fluctuations in their electricity cost. The concern seems to be that a customer … larger than it had budgeted for. I analyze the magnitude of this risk, using demand data from 1142 large industrial customers …, and then ask how much of this risk can be eliminated through various straightforward financial instruments. I find that …

associated with average returns. We show that the resulting portfolios are likely to capture not only the priced risk associated … with the characteristic, but also unpriced risk. We develop a procedure to remove this unpriced risk using covariance …

average risk tolerance across investors. The same constant applies to every real foreign investment held by every investor … market risk premia, an average of world market volatilities, and an average of exchange rate volatilities, where we take the … exchange risk approaches zero, the constant will be equal to one minus the ratio of the variance of the world market return to …

a simple extension of the long-run risk model … risks. Portfolios hedging macro uncertainty have historically earned zero or even significantly positive returns, while …

Many people assume that the most significant risk in the housing market is that homeowners are exposed to fluctuations … finds that, even though house price risk endogenously increases with rent risk, the latter empirically dominates for most … households so housing market risk actually increases homeownership rates and house prices. Further, the net effect of rent risk …

Nonlinearity is an important consideration in many problems of finance and economics, such as pricing securities … model of time-varying labor income risk and study the implications of stochastic covariance between labor income and … dividends for the dynamics of the risk premiums on financial wealth and human capital …

Are fluctuations in firms' profitability risk a major cause of regular business cycles? We study this question within … such a model, surprise increases of risk lead to a wait-and-see policy for investment at the firm level and a decrease in … the size of firm-level risk fluctuations. We find that time-varying firm-level risk on its own is unlikely to be a major …