Question

what is the rxplanation of being risk seeking?

what is the rxplanation of being risk seeking?

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Answer #1

Risk-seeking refers to an individual who is willing to accept higher risk in exchange for higher returns. Risk-seeking involves high degree of risk tolerance, or the amount of potential losses an investor is willing to accept. As the risk seeker involves receiving higher return for higher risk, the utility function of risk seeking is convex in shape . Some examples of types of assets that risk-seeking investors would be attracted to may be small cap equities, derivatives, emerging market equities and debt, junk bonds and so on.

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