... financial institutions and investors is the enormous issue of market risks. Risk can be categorised into number of types but a clear understanding of Financial Risk is beneficial in evaluation and monitoring of investments. Financial Risk is the variability in the investor's returns. Investors can considerably reduce the variation in returns by carefully investing in two or more assets. The decision to invest in a particular asset is based on the assessment of the asset's returns, which are compared with the risk associated with that asset. The investors' preference of the degree of risk associated with an asset, effects their decision about the choice of assets. Most investors prefer less risk to more for a given return, and are referred to as Risk Averse. Tversky and Wakker (1995) and Kahneman and Tversky (1979, 2000) support this by stating that the predominance of risk averse investors is most generalised. They prefer a ...

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