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Conceptual problem with risk neutrality-What is a 'risk-neutral world', exactly?

There is no proof, a world where everything grows at risk free rate is defined as risk neutral world. Its just a term; there is no utility so far. I can define a "risk loving" world where ...
Arshdeep's user avatar
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Conceptual problem with risk neutrality-What is a 'risk-neutral world', exactly?

A RNW (risk-neutral world) is a hypothetical world in which all actors are risk-neutral, which means that they value an asset that pays $S_T$ at time $T$ as having the present value \begin{equation} ...
levzettelin's user avatar

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