Risk averse

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Revision as of 17:04, 13 June 2014 by imported>Doug Williamson (Add "expected" before "return".)
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To be risk averse means to prefer a lower level of risk, for any given level of expected 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.


See also