In economics and finance, risk neutral behavior is between risk aversion and risk seeking. If offered either €50 or a 50% chance of each of €100 and nothing, a risk neutral person would have no preference between the two options. In contrast, a risk averse person presented with these options would accept some amount less than €50 in preference to the risky option, while a risk seeking person would accept a less than 50% chance of €100 in preference to the sure €50.
Read more about Risk Neutral: Theory of The Firm, Portfolio Theory, The Risk Neutral Utility Function
Famous quotes containing the words risk and/or neutral:
“The married are those who have taken the terrible risk of intimacy and, having taken it, know life without intimacy to be impossible.”
—Carolyn Heilbrun (b. 1926)
“The lonely Earth amid the balls
That hurry through the eternal halls,
A makeweight flying to the void,
Supplemental asteroid,
Or compensatory spark,
Shoots across the neutral Dark.”
—Ralph Waldo Emerson (1803–1882)