Indifference curve
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Indifference curve is the risk–return trade-off function for a particular investor; reflects that investor's attitude toward risk. An investor would be indifferent between any pair of assets on the same indifference curve. In risk–return space, the greater the slope of the indifference curve, the greater is the investor's risk aversion.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Indifference curve. The risk–return trade-off function for a particular investor; reflects that investor's attitude toward risk. An investor would be indifferent between any pair of assets on the same indifference curve. In risk–return space, the greater the slope of the indifference curve, the greater is the investor's risk aversion.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
