Question

"Investors exhibit three fundamental risk preference behaviours; risk aversion, risk indifference, and risk seeking." Considering the aforementioned assertion, meet with any two retail investors and examine their behaviour in terms of risk preference by comparing and differentiating their investing strategies.

28 Feb 2024
Answer :
Word Count : 495

Let's consider two hypothetical retail investors, Rahul and Priya, and analyze their behavior concerning risk aversion, risk indifference, and risk-seeking tendencies.

Rahul: A Risk-Averse Investor
Rahul is a 45-year-old software engineer who has been investing in mutual funds and fixed deposits for the past decade. His primary goal is to preserve his hard-earned savings and ensure a stable financial future for his family. Rahul exhibits a strong aversion to risk, preferring to invest in low-risk instruments like debt funds, government bonds, and fixed deposits that offer modest but consistent returns.

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