Ch.12 · Matching Schemes to Investor Profiles · medium
Which of the following questions in a risk profiling questionnaire assesses 'risk tolerance' rather than 'risk capacity'?
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EXPLANATION
Risk tolerance is psychological — it is assessed through behavioural questions about how the investor would respond to market declines. 'What would you do if your portfolio fell 20%?' directly probes emotional and behavioural responses. Income, dependants, and debt levels assess risk capacity (financial).
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