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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Risk Profiling for Investors

Ms. Anjali Menon, 35, has a stable income, no dependants, and an emergency fund. She has a 25-year goal of retirement corpus creation. After a 20% market fall she says she would sell everything immediately. Her risk profile should be assessed as:

Her capacity is high because of stable income, no dependants, an emergency fund and a 25-year horizon, but her tolerance is low since she would sell after a 20% fall. The overall profile follows the lower tolerance, with investor education to improve it over time.

  1. AHigh capacity but low tolerance, so the overall profile follows the lower toleranceCorrect
  2. BLow capacity and high tolerance, so the profile is aggressive
  3. CHigh capacity and high tolerance, so the profile is aggressive
  4. DLow capacity and low tolerance, so the profile is conservative

Explanation

Stable income, no dependants, an emergency fund and a long horizon indicate high capacity. Her stated reaction to a 20% fall shows low tolerance. The overall profile should follow the lower measure, so tolerance limits it, though education and gradual exposure may help.

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