If we are asked to identify the investor’s risk objective based on : Below Average Average Above Average Would it make sense to expect that Below Average and Above Average are the most likely answers, since it’s so hard (and so vague) to define what an “average” risk appetite is ? Therefore in order to avoid any ambiguity (which is the spirit of all cfa questions), it would be one of the two extremes… any insights? Thanks!
That’ s a nice statement. Unfortunately, I am not completely sure I did not cross some question where correct answer was “average”. What if the clients tells you he has average risk appetite and nothing contradicts this statement? anyway 
No what you do if I remember this correctly, is you screw your eyes up shake your head and if you can see AA that means above average; AV = average and BA = Below average. Just like a magic 8-ball.
First, it seems like the language around risk is that you’re either talking about ABILITY or WILLINGNESS. The risk objective section should specify both, then determine the overall risk as the more conservative of the two. I think either WILLINGNESS or ABILITY could reasonably come out plain old average. If a client said, “some downside risk is ok, but I don’t want to lose 30% of value in one year” I would call that average WILLINGNESS. If a client had a required return of 7 % nominal, and 15 years to retirement, I’d call that average ABILITY.
Look at schweser practice book vol1 exam 3AM : average risk was correct answer
Overall average could very well be the answer… Look at the Mueller’s (V2, p. 161 - also on the '03 or '04 exam): - They have $600K in the bank, $25K annually they can save, and are getting $1.2mm in 5 years… above average - On the minus side, they are mid-life and have a daughter approaching college (combined $210K outflow)… takes them down a notch - They prefer minimal-volatility investments, but 1/3 of their net worth is in a high-tech firm with an uncertain future … so, the willingness is a bit fuzzy. Answer key scores them overall average.