Overall, it seems likely that both GNP and GDP growth will remain positive this year, albeit significantly less than 1 per cent. Although some improvement is in prospect, growth is likely to remain below potential in 2009 at about 2 per cent.
An example of this is venture capital funds, which use their ability to evaluate young and highly innovative firms to reduce the very high idiosyncratic risk of individual firms for their investors. Similarly, securitization companies can offer investors bonds with different risk/return profiles bundled into portfolios of assets not individually negotiable.