Abstract

In the financial market, risk appetite is the key factor of investors decision-making, which determines investors acceptance of risk and investment behavior. The importance of risk appetite is that it affects asset allocation, investment strategy selection, and risk management. In financial markets, risk appetite is measured by psychological tests and questionnaires, analysis of historical trading data, and consideration of an investor s life cycle. The adjustment of asset allocation strategy needs to be reviewed and adjusted regularly to respond to market changes and adopt corresponding coping mechanisms when investors risk appetite changes.

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