Portfolio Design

Module 1 Quiz

Lesson 5 Module 1

  • Regarding the question on risk tolerance and risk preference. I answered risk preference indicates how bold your are, because preference to avoid pain seems to drive action that precedes the pain that may incur as a result of events that one has no control over but must tolerate or accept. Additionally, there is the issue of risk capacity, which may also take precedence over tolerance, because, for a 60 year old, he may stop short of maximizing his risk tolerance by choosing a less ‘bold’ approach to his investments to avoid potential loss.

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