Risk averse

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Revision as of 10:19, 19 November 2014 by imported>Doug Williamson (Added link to The Treasurers Handbook - Guide to risk managment)
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To be risk averse means to prefer a lower level of risk, for any given level of expected return or expected cost.

Therefore, for example, risk averse investors will always require a higher expected rate of return to compensate for any higher levels of risk which they accept.


The assumption that market participants are rational and risk averse is one of the underpinnings of the efficient market hypothesis.


See also