Is risk tolerance including risk tolerance (risk willingness), risk capacity (risk ability) and risk perception?
Or risk tolerance just one concept for risk willingness.?
Thanks
Risk Tolerance :- Willingness and ability to take risk e.g you might not have money to invest in private equity but you wish to invest in private equity. so you have willingness and not the ability. it can be other way as well.
Risk Capacity:- it more objective measure it looks at your risk ability considering your income, liquidity requirements, and other considerations.
Risk perception :- It is how a individual views risk. For you risk might be just standard deviation for me risk might be relative measure.
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