Risk Tolerance

Risk tolerance is an individual's willingness to accept financial risk. It is closely related to an investor's attitude towards risk and their ability to accept losses. For example, a conservative investor may be willing to take on only a small amount of risk, while a more aggressive investor may be willing to take on larger amounts of risk.

Risk Capacity is an investor's financial ability to accept risk, while Risk Attitude is an investor's emotional willingness to accept risk.

For example, an investor with a high risk capacity and a high risk attitude may have a high risk tolerance and be willing to invest in riskier securities. On the other hand, an investor with a low risk capacity and a low risk attitude may have a low risk tolerance and be more likely to invest in safer securities.