Demand for risky financial assets: A portfolio analysis
Abstract Demand for risky financial assets takes place in portfolio settings. The common stochastic orders applied in economics fail to rank demand for assets in such situations even for risk-averse investors. Therefore, the evaluation of the relative desirability of risky financial assets requires the establishment of new orders. We prove that if returns on risky assets are ordered by the monotone likelihood ratio order then dominating assets will be more desired by all investors with nondecreasing utility functions.