Risk Preference For Funds
Risk preference for funds refers to the degree to which individuals or institutions are willing to accept risk in investment decisions. Risk preference for funds is typically determined based on the degree of preference for expected returns and losses. High risk preference indicates that individuals or institutions are more willing to take higher risks in order to obtain higher returns, while low risk preference indicates that individuals or institutions are more inclined to choose lower risks to maintain the safety of funds. Risk preference for funds can be reflected through portfolio allocation and selection.
Risk Appetite
Definition
Risk appetite refers to the degree of risk that an individual or institution is willing to accept in their investment decisions. It is typically determined by their preference for expected returns and tolerance for potential losses. A high risk appetite indicates a willingness to take on higher risks for the possibility of higher returns, while a low risk appetite suggests a preference for lower risks to ensure capital safety. Risk appetite can be reflected in the configuration and selection of an investment portfolio.
Origin
The concept of risk appetite originated from modern investment theory, particularly Harry Markowitz's
