Portfolio Management Q170
0. Which of the following statements best distinguishes risk tolerance from risk budgeting?
- A
Risk tolerance focuses on the appetite for risk and what is and is not acceptable, while risk budgeting has a more specific focus on how that risk is taken.
- B
Risk budgeting focuses on the appetite for risk and what is and is not acceptable, while risk tolerance has a more specific focus on how that risk is taken.
- C
Risk budgeting focuses on how much risk an organization can tolerate, while risk tolerance deals with actively distributing that risk.
- Option : A
- Explanation : Risk tolerance and risk budgeting are different form each other because risk tolerance focuses on the appetite for risk and what is and is not acceptable, risk budgeting has a more specific focus on how that risk is taken.
