In finance, risk aversion relates to the psychology of avoiding risk. Investors are considered to be 'risk averse' in relation to market situations, financial products, or other elements of a transaction. This may also include a demand for compensation for risk, like a higher return on subprime securities, or other form of coverage for the risk taken. Risk aversion is a primary consideration in investment, because it affects the marketability of many products.
Examples of Risk Aversion:
|We're seeing a lot of risk aversion in the market to low grade bonds.|
We can expect strong risk aversion behavior to the property sector.