Investor Risk/Return Preferences (Part I) : Professional and Financial Characteristics

This study extends previous inquiries concerning positive (as opposed to normative) aspects of common-stock investor behavior and provides preliminary empirical evidence on the association between risk/return preferences and expectations for specified investor attributes.Part I of the study analyzes these relationships for defined professional and financial investor characteristics: (1) education, (2) occupation, (3) family income, and (4) dollar holdings of common stock. A central, and perhaps unique, aspect of the study is the simultaneous analysis of various risk/return preference relationships (tradeoffs) for each specified investor characteristic. Previous research by the authors in this area originated with earlier criticisms of the methodology used in empirical research on equity valuation. These criticisms recommended that the research methodology be redirected to include include internal methods, such as survey research