Lesson: Risk Attitudes

In this lesson, Nick Palazzolo, CPA, demystifies the tendencies associated with risk attitudes important to understand when making investment decisions. He walks through the typical inclination of being risk-averse, where an increase in investment risk demands a higher potential return, which is the standard stance for most investors. Nick provides real-world examples, like investing in a country with a new government, to illustrate this concept and explains how this expectation shifts for those who are risk-indifferent or risk-seeking. By contrasting these behaviors, he clarifies why some managers might accept greater risk without demanding higher returns, and why others might even accept lower returns in riskier ventures. Wrap up with a firm grasp on these risk attitudes and why understanding them is crucial for decision-making in the finance world.