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Revista de Econom´a del Rosario. Vol. 14. No. 1. Enero - Junio 2011. 57 - 60

Adding one risk to another: generalizing the unavoidable
(background) risk

Received: January, 2011 - Accepted: March, 2011

Moawia Alghalith *

Economics Department.

University of West Indies.

Resumen

Este artfculo ofrece una generalization del modelo de riezgo subyacente. En primer lugar, se re-
lajan los supuestos de independencia. En segundo lugar, se adopta una forma funcional general.
Tercero, se adopta un tipo de riesgo general. Adicionalmente se presenta una nueva forma gene-
ral de riesgo subyacente.

Clasificacion JEL: D8, D2.

Palabras clave: Riesgo subyacente, incertidumbre.

Abstract

This paper provides a complete generalization of the background risk models. In so doing, first,
it relaxes the independence assumption. Second, it adopts a general functional form. Third, it
adopts a general type of risk. Furthermore, it introduces a new general form of background risk.

JEL Classification: D8, D2.

Keywords: Background risk, uncertainty.

*UWI. St. Augustine, Trinidad. Tel: (868) 7245804. E-mail: [email protected]

© Revista de Economta del Rosario. Universidad del Rosario.

ISSN 0123-5362 - ISSNE 2145-454x



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