Following from bigwilly’s post yesterday I am finding myself continually tripping up on this. I always seem to get ability to take risk wrong. What do others use as rule of thumb for a high / medium / low tolerance? I had always thought that any return requirement over 5% was relatively high pointing towards low or, at most, medium ability to tolerate risk but some of the practise exams / tests seem to contradict this. Frustratingly I seem to be able to practice these types of questions without getting any better at the next one I attempt – I really hate this subjective stuff!
around 7-8% is a reasonable rate of return (average risk) from what I have seen from CFAI & Other examples.