n NISM Certifications
XXI NISM Series XXI-A
Medium

An investor's "Risk Tolerance" refers to:

Practice question from NISM XXI A for PMS - Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    The maximum loss the investor can bear

  2. The degree of variability in investment returns the investor is willing to accept

    Correct answer

  3. C

    The level of risk the investor is legally permitted to take

  4. D

    The amount of risk an investor avoids at all costs

Why this is the answer

Risk tolerance reflects an investor’s comfort with fluctuations in returns.

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