What is risk aversion and why does it matter/what role does it play in making investment...

What is risk aversion and why does it matter/what role does it play in making investment decisions?

Expert Solution

Risk aversion means that the investor is more inclined towards less risky investment as compared to high-risk projects.

These investors mostly invest their money in the

1) savings accounts,

2) certificates of deposit (CDs),

3) dividend growth stocks.

Among above, with the exception of the dividend growth stocks, it guarantee that the amount invested will be there when the investor chooses to liquid it in.

Dividend growth stocks, will increase or decrease. However, they are commone for two major attributes:

1) They are shares of grown companies and proven track records , and

2) they frequently pay their investors a dividend.

jeff jeffy answered 2 years ago

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