THE IMPACT OF RISK ON THE STOCK EXCHANGE BEHAVIOUR

Titus Suciu () and Patrizia Gazzola ()
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Titus Suciu: Transivania University of Brașov

Journal of Smart Economic Growth, 2018, vol. 3, issue 1, 1-12

Abstract: Risk is a permanent feature of the capital market, as it plays the main part on the stock exchange. The work shows us the impact of risk on the behaviour of the stock exchange traders: ignoring correlations, prejudice of familiarity, national bias, local bias, employer’s prejudice and the emotional bias. Investors are faced with the difficulty of assessing the risk of owning an asset for their income. They would rather take into account the inherent risk of assets, than to appreciate the change generated regarding the global risk of their securities. Investing will actually allow to adapt the income performances when they are on the rise, when the others fall, and the other way round. Revenue, taken as a whole, has to be optimal and to best reflect the preference of those who economise relatively to the risk. Even for someone who is very prudent, risky actions may be needed to get the best performance possible, taking into account the low risk level. Prejudice of familiarity appears when an individual prefers an option to another one just on grounds of familiarity. Advertising effort has a stronger impact on the number of individual shareholders. Such a result confirms the ideea that private persons, more than professionnals, trust nonfinancial criteria such as familiarity to choose investments.

Keywords: risk; behaviour; finance; investor; psychology (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:seg:012016:v:3:y:2018:i:1:p:1-12

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