- CFA Exams
- CFA Level I Exam
- Study Session 19. Portfolio Management (2)
- Reading 54. Basics of Portfolio Planning and Construction
- Subject 2. Investment Risk and Return Objectives, and Risk Tolerance
CFA Practice Question
A client's ability to take risks is mainly determined by these factors:
II. Psychological factors
III. Level of financial knowledge
IV. Net wealth
I. Investment time horizon
II. Psychological factors
III. Level of financial knowledge
IV. Net wealth
A. I, II, III and IV
B. I and IV
C. I, III ad IV
Explanation: II and III are factors that mainly affect the willingness to take risks.
User Contributed Comments 5
| User | Comment |
|---|---|
| ksnider | argh. ability vs willingness... |
| Mikehuynh | Ability => quantitative factors Willingness => qualitative measure |
| enetis | Darn... gotta read!!!! |
| ars2011 | Why doesnt level of financial knowledge matter |
| farhan92 | think of it like this... You walk into William Hill on your lunch break with 10 pounds in your hand (you have the time and money to gamble). However, just because you have no idea how roulette works doesn't mean you can't play it. So you do not need the knowledge to take a risk just the money and time. |