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Original paper

Reference-dependent preferences and the risk–return trade-off

Volume: 123, Issue: 2, Pages: 395 - 414
Published: Sep 30, 2016
Abstract
This paper studies the cross-sectional risk–return trade-off in the stock market. A fundamental principle in finance is the positive relation between risk and expected return. However, recent empirical evidence suggests the opposite. Using several intuitive risk measures, we show that the negative risk–return relation is much more pronounced among firms in which investors face prior losses, but the risk–return relation is positive among firms in...
Paper Details
Title
Reference-dependent preferences and the risk–return trade-off
Published Date
Sep 30, 2016
Volume
123
Issue
2
Pages
395 - 414
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