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- Title
THE CONCEPT OF RISK TOLERANCE IN PERSONAL FINANCIAL PLANNING.
- Authors
Hanna, Sherman D.; Waller, William; Finke, Michael
- Abstract
Assessment of risk tolerance is fundamental to proper asset allocation within a household portfolio. It is also a frequently misunderstood concept and difficult to measure practically. We discuss the relationship between risk aversion and portfolio recommendations based on an expected utility approach, review selected empirical research on risk tolerance, and propose to separate risk capacity, expectations, and other factors from the concept of risk tolerance.
- Subjects
PERSONAL loans; RISK management in business; FINANCIAL planning; FINANCIAL management; WEALTH management services; ASSET allocation; EXPECTED returns; PORTFOLIO management (Investments); FINANCIAL services industry
- Publication
Journal of Personal Finance, 2008, Vol 7, Issue 1, p96
- ISSN
1540-6717
- Publication type
Article