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Which kind of stock is most affected by changes in risk aversion? (In other words, which stocks see the biggest change in their required returns?)
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Which kind of stock is most affected by changes in risk aversion? (In other words, which stocks see the biggest change in their required returns?)

User Hamidreza Soleimani
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1 Answer

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Answer:

High beta stocks

Step-by-step explanation:

High beta stocks are mostly affected by changes in risk aversion. Beta measures a stock's volatility in comparison to the overall market. High-beta stocks are supposedly riskier but these stocks provide potentials for higher return, low-beta stocks have lower risk and also lower returns.

In simple terms, high beta stocks is much more volatile than the index it's being measured against.

User Ali Kashanchi
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