CAPM (Certified Associate in Project Management) Practice Exam

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What best describes risk tolerance?

  1. The amount of risk that can be accepted without action

  2. The level of risk after all responses have been taken

  3. The ability to endure risk to a certain degree

  4. The process of managing risk in a project

The correct answer is: The ability to endure risk to a certain degree

Risk tolerance refers to an individual's ability and willingness to take on risk in their investments. Option A is incorrect as it suggests that no action is taken in response to risk. Option B is incorrect as it implies that risk can be eliminated or mitigated completely. Option D is incorrect as it focuses on project management rather than individual risk tolerance.

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