Risk Averse


DEFINITION of 'Risk Averse'

A description of an investor who, when faced with two investments with a similar expected return (but different risks), will prefer the one with the lower risk.


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A risk-averse investor dislikes risk, and therefore will stay away from adding high-risk stocks or investments to their portfolio and in turn will often lose out on higher rates of return. Investors looking for "safer" investments will generally stick to index funds and government bonds, which generally have lower returns.

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  3. What does it mean to be absolutely risk averse?

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    The findings of behavioral economists regarding risk aversion can best be summarized by the phrase, "losses loom larger than ... Read Full Answer >>
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