Unlike insurance transactions, wherein insurers utilize their considerable
leverage to assume risk, capital market transactions require a counterparty.
For every seller of a marketable security, there must be a buyer, a counterparty.
When risk is offloaded in the capital markets, it must be picked up by a counterparty
willing to assume the risk. Because of the need for noncorrelating high-risk
positions in diversified investment portfolios, risk-taking counterparties exist.