Risk Neutral

Risk Neutral is an indifference to possibility. The risk neutral investor would be in the middle of the continuum represented by risk-seeking traders at one end, and risk-averse investors for other extreme. Risk neutral measures find extensive application inside pricing of derivatives. A risk fairly neutral party’s decisions are be affected by their education of uncertainty in a few outcomes, so a possibility neutral party is usually indifferent between choices with equal expected payoffs regardless of whether one choice is usually riskier.