Portfolio Management Q134

0. Which of the following is the most difficult to quantify, while preparing an investment policy statement?

  • Option : B
  • Explanation : Measuring willingness to take risk (risk tolerance, risk aversion) is an exercise in applied psychology. Instruments attempting to measure risk attitudes exist, but they are clearly less objective than measurements of the ability to take risk. Ability to take risk is based on relatively objective traits such as expected income, time horizon, and existing wealth relative to liabilities.
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