Purchase Solution

Impact of risk aversion on asset prices

Not what you're looking for?

Ask Custom Question

Suppose the market risk premium is currently 6%. If investors were to become more risk-averse, the market risk premium might increase to 8%. If investors become more risk-averse, what effect would you expect this to have on the prices of financial assets?

Prices would increase?
Prices would be unaffected?
Prices would decrease?

Purchase this Solution

Solution Summary

This post answer a simple question on how the degree of risk aversion would impact the prices of financial assets.

Solution Preview

When investors are more risk averse, market risk premium will increase and hence the ...

Purchase this Solution


Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.