Lakhasly

Investors can be classified on the basis of their risk bearing capacity.The risk bearing capacity of an investor is a function of personal, economic, environmental, and situational factors such as income, family size, expenditure pattern, and age.Investors in the financial market have different attitudes towards risk and hence varying levels of risk-bearing capacity.Risk bearers fall in between these two categories.

Investors can be classified on the basis of their risk bearing capacity. Investors in the financial market have different attitudes towards risk and hence varying levels of risk-bearing capacity. Some investors are risk averse, while some may have an affinity for risk. The risk bearing capacity of an investor is a function of personal, economic, environmental, and situational factors such as income, family size, expenditure pattern, and age. A person with a higher income is assumed to have a higher risk-bearing capacity. Thus investor can be classified as risk seekers, risk avoiders, or risk bearers. A risk seeker is capable of assuming a higher risk while a risk avoider choose instruments that do not show much variation in returns. Risk bearers fall in between these two categories. They assume moderate levels of risk.