Risk averse: Difference between revisions
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imported>Doug Williamson (Added link to The Treasurers Handbook - Guide to risk managment) |
imported>Doug Williamson (Expand for Rational.) |
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== See also == | == See also == | ||
*[[Adverse]] | |||
*[[Efficient market hypothesis]] | |||
*[[Guide to risk management]] | |||
*[[Rational]] | |||
*[[Risk]] | *[[Risk]] | ||
*[[Risk appetite]] | *[[Risk appetite]] | ||
[[Category:Corporate_finance]] | [[Category:Corporate_finance]] | ||
[[Category:Risk_frameworks]] | [[Category:Risk_frameworks]] | ||
Revision as of 21:20, 16 March 2018
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.
