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# Common Returns of Stock

## Definition

The typical or average profits earned by capital employed in various trades under normal market conditions, which Smith argues should be sufficient to compensate for occasional losses and provide a surplus profit comparable to insurance returns if risk were fully compensated.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses the concept of common returns to analyse whether different employments of stock offer adequate compensation for their risks. He argues that if hazardous trades like smuggling offered full compensation for risk, bankruptcies would not be more frequent in these trades than in safer enterprises, suggesting that risk is systematically underpriced.

## Economic Domain

Distribution

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