Abstract
There exists extant evidence which shows risk-return trade-offs within stock markets cannot be rationalized by assumptions of global risk aversion. The extent to which dearth of global risk aversion is evidence of transitions between risk averse and risk seeking preferences, or interactions between risk averse and risk seeking preferences remains, however, a matter of conjecture. This note demonstrates application of the single crossing property to risk premiums that are output of one-factor and two-factor Capital Asset Pricing Models (CAPMs) enables inferences as to presence or absence within stock markets of agents characterized primarily by risk seeking preferences. The framework proposed not only allows for qualitative inferences, but enables parameterization of effects of risk seeking agents on risk premiums which obtain within stock markets.
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