Multiple choice

The risk tolerance of investors is independent of

  1. His age

  2. His income

  3. The stock market movements

  4. His job security
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Risk tolerance is a personal psychological trait determined by individual circumstances: age (younger investors can typically take more risk), income levels (higher income allows more risk absorption), and job security (stable jobs enable greater risk-taking). Option C is correct because stock market movements are external factors - they affect portfolio risk but do not change an investor's inherent tolerance for risk. An investor's risk tolerance is independent of what the market is doing on any given day.

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