Risk Tolerance Profile of Investors in the Middle East

Determinants of risk/return attributes of Investors are of great importance in a growing area known as Behavioral Finance. Behavioral Finance concentrates on the individual attributes and the psychological aspects of investors that shape financial and investment practices together. Tolerance is the level of risk that a client believes they are willing to accept. Risk Tolerance must be measured simply because it is an aspect of utility for any investment decision and maximizing the expected utility is considered to be the ultimate goal in any financial activity. Through this paper the author analyses the Risk Tolerance Level of individual investors in the Middle East and thereby suggests a suitable investment portfolio to them. It also investigates the demographic and socioeconomic factors for assessing the financial risk tolerance of individual investors.