A Survey Data Response To The Teaching Of Utility Curves And Risk Aversion

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
Jeffrey Hobbs PhD, Professor (Creator)
Appalachian State University (ASU )
Web Site: https://library.appstate.edu/

Abstract: In many finance and economics courses as well as in practice, the concept of risk aversion is reduced to the standard deviation of returns, whereby risk-averse investors prefer to minimize their portfolios’ standard deviations. In reality, the concept of risk aversion is richer and more interesting than this, and can easily be conveyed through theoretical or applied examples. The authors offer an example of a 2-asset choice problem in which risk-averse investors ought to prefer the asset with not only a higher standard deviation but also a lower expected return. A corresponding survey of 131 respondents confirmed this preference.

Additional Information

Jeffrey Hobbs & Vivek Sharma (2011) A Survey Data Response to the Teaching of Utility Curves and Risk Aversion, Journal of Education for Business, 86:2, 59-63, DOI: 10.1080/08832321003774780. Publisher version of record available at: https://www.tandfonline.com/doi/full/10.1080/08832321003774780
Language: English
Date: 2011
kurtosis, risk aversion, skewness, standard deviation

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