Portfolio Management - Portfolio Management Section 2
- Option : B
- Explanation : Absolute return objectives can also be stated in terms of the probability of specific portfolio results, percentage losses or dollar losses, rather than strict limits on portfolio results.
- Option : C
- Explanation : Give the high income and savings, his ability to take risk is high. However, his attitude towards the stock market and the possibility of losing money indicates that his willingness to take risk is low.
- Option : A
- Explanation : Given that she is young and has a secure, well-paying job, her ability to take risk is high. We are told that she is also willing to take risk. Consequently, her risk tolerance will most likely be characterized as „high.‟
20. Which of the following factors is most likely to affect an investor’s willingness to take risk?
- Option : B
- Explanation : It is important to distinguish between the willingness to take risk and the ability to do so. An investor‟s willingness to take risk is based primarily on the investor‟s beliefs and attitudes towards the investment. The other two factors affect the person‟s ability to take the risk and not the willingness.
*/?>
*/?>
*/?>
*/?>