Mr. Davies, retired at 68, relies heavily on his investment portfolio to cover his monthly living expenses. He specifically states that he cannot afford any significant drops in his portfolio's value due to the impact it would have on his quality of life. This statement primarily informs the advisor about Mr. Davies's:

Question: Mr. Davies, retired at 68, relies heavily on his investment portfolio to cover his monthly living expenses. He specifically states that he cannot afford any significant drops in his portfolio's value due to the impact it would have on his quality of life. This statement primarily informs the advisor about Mr. Davies's:

Answer options:

• Time Horizon
• Income Needs
• Investment Objectives ✅ Risk Tolerance

Correct answer: Risk Tolerance

Explanation: Mr. Davies's concern about significant drops in value directly relates to his capacity for and comfort with potential investment losses, which defines his risk tolerance.