An important part of the Financial Investment Plan (FIP) Module is the risk-return formula. The risk-return formula shows the relationship between the standard deviation of an investment, which corresponds to the risk score of a portfolio (from 0 to 100) and its expected return. The formula is used as input for a Monte Carlo simulation, from which the scenarios that are used in the questionnaire to assess a client’s risk tolerance are derived. We have recently updated the risk-return formula
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