...Ľuboš Pástor; Pietro Veronesi Cremers and Yan (2016) aim to provide “an additional litmus test for the uncertainty-convexity argument in Pástor and Veronesi (2003) .” We challenge this view, as well as the authors’ related thoughts on the technology “bubble” of the late 1990s. Nonetheless, we...

...Martijn Cremers; Hongjun Yan Pástor and Veronesi (2003) proposed the idea that uncertainty about a firm’s profitability could increase its stock valuation, as an explanation for several phenomena in financial markets. We further examine this idea in a set-up with both stocks and bonds, and show...