scholarly journals Some Forms of InvestorRiskTolerance in Investing: Review Theory

2020 ◽  
Vol 1 (3) ◽  
pp. 23-28
Author(s):  
Jumadil Saputra
Keyword(s):  
Theoretical Study ◽  
Utility Functions ◽  
Risk Tolerance ◽  
Square Root ◽  
Logarithmic Utility ◽  
Quadratic Utility ◽  
Level Of Risk

Investors in investing are always accompanied by a sense of tolerance for the risk of funds invested in an asset. Each investor has a different form of risk tolerance, depending on the function of the utility. This paper aims to conduct a theoretical study of the forms of investor risk tolerance for several utility functions. This study is carried out by reviewing several utility functions which include: square root utility, cubic fraction utility, quadratic utility, exponential negative utility, and logarithmic utility. Based on the results of the study for each of these utility functions, successively obtained risk tolerance in the form of linear, linear, linear, constant, and linear. Linear risk tolerance illustrates that an investor changes the value of his investment in line with changes in the level of risk faced.

scholarly journals The determinants of risk tolerance: A behavioural analysis

2012 ◽  
Vol 9 (2) ◽  
pp. 476-485 ◽  
Author(s):  
Everton Anger Cavalheiro ◽  
Kelmara Mendes Vieira ◽  
Paulo Sérgio Ceretta
Keyword(s):  
Decision Making ◽  
Regression Analysis ◽  
Prospect Theory ◽  
Risk Tolerance ◽  
Financial Decision Making ◽  
Behavioural Analysis ◽  
Determining Factors ◽  
Financial Decision ◽  
Santa Maria ◽  
Level Of Risk

The traditional perspective of financial theory suggests an implicit rationality on decision making. Historically, researches have revolved around demographic, social and economic heuristics, thus neglecting the emotional, cognitive and behavioral suppositions, related to financial decision making. In this sense, this study aims to evaluate which are the determining factors for risk tolerance. So, we carried out a survey on 815 individuals residing in Santa Maria, Julio de Castilhos and Cruz Alta, Brazil. Afterwards, we performed a CFA and, eventually, a regression analysis. Generally and consistently, the suppositions for rationality were refuted, though consistent to the Prospect Theory, validating the numerous studies that demonstrate the violation of the rationality suppositions. The heuristics which are traditionally used in order to determine the level of risk tolerance have not shown to be significant in this research. The cognitive, emotional and behavioral dimensions of decision making have shown to be significant.

scholarly journals ANALISIS RISIKO USAHA BUDIDAYA IKAN LELE DUMBO DI KECAMATAN KOTA GAJAH KABUPATEN LAMPUNG TENGAH

2021 ◽  
Vol 9 (2) ◽  
pp. 48
Author(s):  
Neni Marlina ◽  
Ktut Murniati ◽  
Eka Kasymir
Keyword(s):  
Lower Limit ◽  
Random Sampling ◽  
Simple Random Sampling ◽  
Price Risk ◽  
Production Risk ◽  
Quadratic Utility ◽  
And Behavior ◽  
Utility Approach ◽  
Level Of Risk

This research aims to determine the level of risk and behavior faced by farmers in dumbo catfish farming. This research was a survey conducted in Kota Gajah Subdistrict of Central Lampung Regency in August-September 2018. Respondents are 44 dumbo catfish farmers members of the Fish Cultivation Group (pokdakan) taken using simple random sampling. The results of this research showed that the dumbo catfish farming in Kota Gajah Subdistrict of Central Lampung Regency has the CV value price risk of 0.04 and the lower limit (L) of IDR15,320. The CV value less than 0.50 means that farmers risk suffered losses due to changes in low classified price. CV value of production risk is 0.04 and the lower limit (L) is 2,449.33 kg. The CV value less than 0.50 means that farmers risk experiencing losses due to changes in production relatively low. Based on the analysis that was done with the quadratic utility approach shows that dumbo catfish farmers in Kota Gajah Subdistrict are 41 farmers behave neutrally and 3 farmers behave boldly in facing the risk of catfish farming.Key words: behavior, dumbo catfish, farmers, risk

scholarly journals The time resolution of the St Petersburg paradox

2011 ◽  
Vol 369 (1956) ◽  
pp. 4913-4931 ◽  
Author(s):  
Ole Peters
Keyword(s):  
Time Resolution ◽  
Utility Functions ◽  
Average Performance ◽  
Logarithmic Utility ◽  
Standard Resolution ◽  
Time Average ◽  
Petersburg Paradox

A resolution of the St Petersburg paradox is presented. In contrast to the standard resolution, utility is not required. Instead, the time-average performance of the lottery is computed. The final result can be phrased mathematically identically to Daniel Bernoulli's resolution, which uses logarithmic utility, but is derived using a conceptually different argument. The advantage of the time resolution is the elimination of arbitrary utility functions.

scholarly journals Methodology Development to Assess the Contractor Risk Tolerance from the Rocket and Space Technology Life Cycle Stage

2019 ◽  
Vol 8 (4) ◽  
pp. 7894-7898
Keyword(s):  
Life Cycle ◽  
Production Process ◽  
Preventive Measures ◽  
Risk Tolerance ◽  
The State ◽  
Space Technology ◽  
Technical Requirements ◽  
Stage Of Development ◽  
State Defense ◽  
Level Of Risk

The article proposes a universal technique, which consists in applying an assessment of the level of risk tolerance of the contractor of the State Defense Order, taking into account the stage of the life cycle of rocket and space technology; the relationship between the levels of risk tolerance of the enterprises of the rocket and space industry from the stage of the life cycle of the production process is revealed. Consideration of this pattern will allow to take preventive measures in advance. The result obtained is universal both for management, for marketing, and for the military economy and the economy of business entities as a whole. Specifically, at the stages of development and the birth of the production process, the level of risk is high, and the risk tolerance of the RCT enterprise is low; at the stage of development of production, when tactical and technical requirements (TTT) are achieved, risk tolerance increases; at the maturity stage of the production process, risk tolerance reaches a maximum level. Then, the hypothesis of the study is that when implementing the State Defense Order, it is necessary to introduce a plan for the continuity of control of production processes, where the SWOT analysis and risk tolerance assessment should become tools for monitoring the implementation of R&D, which will act as a tool for assessing guarantees of fulfillment and leveling the risks of not fulfilling R&D. Taking into account the revealed relationship between the levels of risk tolerance of executing enterprises and the stage of the R&D life cycle will make it possible to take preventive measures in advance during the implementation of the State Defense Order.

scholarly journals Derivatives in South Africa – an empirical investigation

2011 ◽  
Vol 1 (1) ◽  
pp. 68-84
Author(s):  
Stefan Schwegler ◽  
Suzette Viviers
Keyword(s):  
South Africa ◽  
Financial Markets ◽  
Financial Services ◽  
Empirical Investigation ◽  
Risk Tolerance ◽  
Financial Services Industry ◽  
Price Determination ◽  
Over The Counter ◽  
Derivative Instruments ◽  
Level Of Risk

This paper, which is the second of a two-part series, presents the empirical findings of testing a number of variables influencing investors’ decisions to use derivatives in their portfolios. Five variables were deemed very important by a sample of 21 experts in the financial services industry in South Africa. These were: the level of information available (including the transparency of price determination); investor’s knowledge of different derivative instruments; investor’s level of risk tolerance; the level of liquidity in the market; and investor’s knowledge of and familiarity with financial markets. Education is required to change negative sentiments regarding derivatives and more regulation is called for, especially in over-the-counter markets.

scholarly journals Variables influencing the use of derivatives in South Africa – the development of a conceptual model

2011 ◽  
Vol 1 (1) ◽  
pp. 52-67 ◽  
Author(s):  
Stefan Schwegler ◽  
Suzette Viviers
Keyword(s):  
South Africa ◽  
Financial Markets ◽  
Conceptual Model ◽  
Risk Tolerance ◽  
Price Determination ◽  
Product Availability ◽  
Derivative Instruments ◽  
Asset Classes ◽  
Level Of Risk

This paper, which is the first in a two-part series, sets out the development of a conceptual model on the variables influencing investors’ decisions to use derivatives in their portfolios. Investor-specific variables include: the investor’s needs, goals and return expectations, the investor’s knowledge of financial markets, familiarity with different asset classes including derivative instruments, and the investor’s level of wealth and level of risk tolerance. Market-specific variables include: the level of volatility, standardisation, regulation and liquidity in a market, the level of information available on derivatives, the transparency of price determination, taxes, brokerage costs and product availability.

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