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Empirical evidence on risk aversion for individual romanian capital market investors

Cristian Paun (), Radu Musetescu (), Iulian Viorel Brasoveanu () and Alina Draghici ()
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Radu Musetescu: Academy of Economic Studies, Bucharest
Alina Draghici: Academy of Economic Studies, Bucharest

Authors registered in the RePEc Author Service: Radu Cristian Musetescu ()

Review of Economic and Business Studies, 2008, vol. 1, 91-101

Abstract: The evolution of stock prices is influenced by the expectations of investors regarding the earning prospects associated to each listed company. One of the key elements of investment decision is the positive relationship between risk and return. Risky securities are preferred to less risky ones only if there is a higher pay-off in the long run that could compensate the investors. The previous studies proved that expected return direct correlated with risk and, due to the presence of risk aversion, this relationship is assumed to be positive one. Risk premium is determined by a lot of factors including risk aversion. The intensity of risk aversion and the evolution of it during a specific period of time are very important for any market. This study proposed an analysis of risk aversion that is based on a specific survey and it is very useful for comparative analysis with other similar studies developed on the case of other emerging markets (from EU or outside EU).

Keywords: risk aversion; individual investor; Romanian capital market (search for similar items in EconPapers)
Date: 2008
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