Risk averse: Difference between revisions
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imported>Doug Williamson (Create the page. Source: ACT Risk Management, Reading 1.1.1 p4 The Concept of Risk, 1 April 2011.) |
imported>Doug Williamson m (Make "market" singular.) |
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The assumption that market participants are rational and risk averse is one of the underpinnings of the efficient | The assumption that market participants are rational and risk averse is one of the underpinnings of the efficient market hypothesis. | ||
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*[[Risk]] | *[[Risk]] | ||
*[[Risk appetite]] | *[[Risk appetite]] | ||
*[[Efficient | *[[Efficient market hypothesis]] | ||
[[Category:Corporate_Strategy]] | [[Category:Corporate_Strategy]] | ||
[[Category:Managing_Risk]] | [[Category:Managing_Risk]] | ||
Revision as of 17:02, 13 June 2014
To be risk averse means to prefer a lower level of risk, for any given level of return or 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.
