Impact of Risk Tolerance Behavior on Investment Decision

Abstract

Making investment decision is difficult process and is also influenced with many other factors. It is also important to think that how much investor is capable to absorb the risk. So it shows minimum, maximum or medium level of intensity for risk that shows different strategies investors use for decision making. Investors need to understand the investment decisions tools and determinants for decision making. The aim of conducting this study is to see the contribution of different factors that effects on the investor investment decision in Pakistan. A study frame work is designed to see the impact of financial literacy, investment experience, and information asymmetry on investor decision making. It is also examined that how much weight each independent variable assigns by the investors while they make investment decisions. In this study data is collected through questionnaires to find the relationship between the variables. Also factor analysis is used to check the reliability and validity of the data. Overall discussions and findings concludes that the behavior of the investors depends on the information that is given and defined to them, and how much they are willing to bear the risk while making the investment decisions, and enables to researchers to analyze the investment style of the investors. This research will help to identify those factors and variables that are impacting on investor decision making process. Key words: Investment Experience, Financial Literacy, Information Asymmetry and Investment Decision.