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<strong style=”font-family: Arial, Helvetica, sans-serif; font-size: 12px; line-height: normal; text-align: justify; margin: 0px; padding: 0px; list-style: none; border: none; outline: none;”>Risk tolerance
<span style=”font-family: Arial, Helvetica, sans-serif; font-size: 12px; line-height: normal; text-align: justify;”>The willingness of an investor to tolerate the risk of losing money for the potential to make money</span>
Risk toleranceis a topic that is often discussed, but rarely defined. It is not unusual to read a trade recommendation discussing alternatives or options based on different risk tolerances
Risk tolerance is the amount of risk that an investors is comfortable taking, or the degree of uncertainty that an investors is able to handle. Risk tolerance often various age,income, and financial goals.
A risk-tolerant investor will pursue higher potential reward investments even when there is a greater potential for a loss. A risk-tolerant individual might not sell his stocks in a temporary market correction, while a risk averse person might panic and sell at the wrong time. On the other end, a risk-tolerant person could be seek out high-risk investments, even if they add little to his or her portfolio.
Risk tolerance is the degree of variability in investment returns that an individual is willing to withstand risk tolerance is an important component in investing. An individual should have a realistic understanding of his or her ability and willingness to stomach large swings in the value of his or her investments.
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