Unlimited Risk

(redirected from Unlimited Risks)

Unlimited Risk

The risk that one's loss on an investment will be larger than the amount one originally invested. For example, in short selling one will lose money if the short sold security rises in price. Because the potential rise in price is theoretically infinite, one may lose much more than one invests. Likewise, a general partner of a company has unlimited liability, meaning that in the event of bankruptcy he/she must pay all debts the company incurs regardless of how much he/she invested in it. See also: Limited liability.
Mentioned in ?
References in periodicals archive ?
According to Kai Jan Krainer (SP), the main reason for this is that it increases the risk for investors by allowing the pension funds to take virtually unlimited risks in equity transactions and foreign currency loans.
By committing Europe's biggest economy - and already its effective paymaster - to the ESM, parliament was essentially exposing Germany's public finances to unlimited risks should one eurozone country after another topple under the debt crisis, they argued.