Some firms are spending billions on researches in order to gain more growth in the future. Such investment can have a very generous profit if the research succeeds, while the risk could be high as well. It can be shown from the stock prices of this kind of firms, especially in the pharmacy industry when the research makes a significant progress the price spikes up, and alternatively when the research fails or does not meet the requirement, the price spikes down. However, sometimes such research can be less risky if the cost is not significantly high and the cost of investing in research varies across different sectors. For example, the resources that are required to invest in aerospace are much greater than the resources that are required to invest in video gaming industries.
Moreover, the resources are not just monetary resources, but also time is very important. Many companies and individuals may be doing the same research project, the one who succeeds first will take all the credit of the research and other participants are unlikely to take any rewards. Therefore, if sometimes the research can succeed, the profits could be much fewer than expected. This could increase the risk of research largely.
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