risk aversion

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Related to Risk tolerant: Risk averse

Risk Aversion

The subjective tendency of investors to avoid unnecessary risk. It is subjective because different investors have different definitions of unnecessary. An investor seeking a large return is likely to see more risk as necessary, while one who only wants a small return would find such an investment strategy reckless. However, most rational economic actors are sufficiently risk averse such that, given two investments with the same return and different levels of risk, they would choose the less risky investment.

risk aversion

The tendency of investors to avoid risky investments. Thus, if two investments offer the same expected yield but have different risk characteristics, investors will choose the one with the lowest variability in returns. If investors are risk averse, higher-risk investments must offer higher expected yields. Otherwise, they will not be competitive with the less risky investments.

risk aversion

the tendency for managers, consumers and other decision-makers to avoid undertaking risks and to choose less risky alternatives. See RISK PREMIUM.

risk aversion

the tendency for managers, consumers and other decision makers to avoid undertaking risks and to choose less risky alternatives. See RISK PREMIUM.
References in periodicals archive ?
Nexia is a very volatile stock which is viewed favorably by many risk tolerant shareholders, traders and investors.
Furthermore, like mood, risk tolerance tends to change with the wind: it's easy to be risk tolerant in rising markets, but during bear markets, most people are much less risk tolerant.
As we prepare for a challenging year in the infosecurity industry, we look forward to Steve's contributions at the conference to help make business more risk tolerant and security measures more effective.