Risk Profiling through a Behavioral Finance Lens is popular PDF and ePub book, written by Michael Pompian in 2016-03-03, it is a fantastic choice for those who relish reading online the Business & Economics genre. Let's immerse ourselves in this engaging Business & Economics book by exploring the summary and details provided below. Remember, Risk Profiling through a Behavioral Finance Lens can be Read Online from any device for your convenience.
Risk Profiling through a Behavioral Finance Lens Book PDF Summary
This piece examines risk profiling through a behavioral finance lens. Behavioral finance attempts to understand and explain actual investor behavior, in contrast to theorizing about investor behavior. It differs from traditional (or standard) finance, which is based on assumptions of how investors and markets should behave. Much has been written about the tension that exists between the willingness to take risk and the ability to take risk. Risk appetite is the willingness to take risk and risk capacity is the ability to take risk. In the behavioral context, risk appetite and risk capacity are defined in terms of known risks and unknown risks. Irrational client behavior often occurs when a client experiences unknown risks. To aid in the advisory process, advisors can use Behavioral Investor Types to help make rapid yet insightful assessments of what type of investor they are dealing with before recommending an investment plan. With a better understanding of behavioral finance vis-à-vis risk taking, practitioners can enhance their understanding of client preferences and better inform their recommendations of investment strategies and products.
Detail Book of Risk Profiling through a Behavioral Finance Lens PDF
- Author : Michael Pompian
- Release : 03 March 2016
- Publisher : CFA Institute Research Foundation
- ISBN : 9781934667828
- Genre : Business & Economics
- Total Page : 22 pages
- Language : English
- PDF File Size : 13,8 Mb
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