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Quick Finance Tip - Risk Aversion, Risk Tolerance, Risk Neutral, and Risk Seeking

11/28/2017

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Risk Aversion is related to the behavior of individuals who have more uncertainty to certain market factors, and will equivocate more than Risk Seeking or Risk Neutral Investors. Risk tolerance is the amount of risk an investor is willing to tolerate to achieve an investment goal.

So In One Sentence To Describe The Difference:
Risk Seeking Investors chooses the gamble, Risk Averse Investors chooses the guaranteed outcome, and Risk Neutral Investors are indifferent between the gamble, and only cares about returns (not risk).


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