Identify and discuss the two basic principles of assessing r

Identify and discuss the two basic principles of assessing risk tolerance.

Solution

Principle of assessing risk tolerance:

Risk tolerance is defined as the degree of variability that the investor is willing to withstand.

The phrase “no pain, no gain” comes to sum up the relationship between risk & reward. The more the risk, greater the rewards & vice versa.

Identify and discuss the two basic principles of assessing risk tolerance.SolutionPrinciple of assessing risk tolerance: Risk tolerance is defined as the degree

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