They ask for the risk tolerance here for an endowment…ability is average and willingness is above average yet the total tolerance is above average. I thought a lower ability would tame the willingness, or is that only the case in non-institutional?
I believe that endowment with the goal to operate into perpetuity has above avg risk tolerance level as a rule of thumb. From reading the CFAI book, for insistutional there is less reliance on using the combination of willingness and ability rule to assess the overall risk tolerance level than individual investor.
Cheers King, looks like I’ll need to brush up on these finer points! The thing is the CFAI answer says ability is avg and willingness above avg…so the two conflict as the answer then goes with above avg willingless despite having said ability is below willigness. I see your point though.
From what I gather is the marker will give you credit if you reasons are sound, the standard answer is just a reference point. I would not worry too much about it. Best of luck