Whitman, Diz on risk
Risk is a word
that should not be used without an adjective in front of it. Just because a
common stock might have a lot of market risk (i.e., a plunge in OPMI [Outside
Passive Minority Investor] market price) and a company might have a lot of
investment risk (i.e., the business is unlikely to survive as a going concern)
does not mean that adequately secured lenders to the corporation are taking any
credit risk at all. Creditors can be confident that the loan will remain a
performing loan or that in a reorganization, they will receive a value of
principal amount plus interest and interest on interest. General risk really
does not exist.
