Which of the following is NOT a factor considered in risk profiling in the QAFP framework?

• A. Time horizon.
• B. Market sentiment.
• C. Financial capacity.
• D. Responses to hypothetical scenarios.

Answer: (B)

Risk profiling in the QAFP framework centers on the client's ability and willingness to take risk based on personal circumstances and finances. Time horizon matters because a longer timeframe generally allows for taking on more risk since there is time to recover from volatility. Financial capacity captures how much loss the client can endure without derailing goals or cash flow. Reactions to hypothetical scenarios reveal actual behavioral responses to different market conditions, beyond what the client might say they would do. Market sentiment, by contrast, is an external market condition and not a personal attribute used to determine an individual’s risk profile, so it’s not part of the risk-profiling factors.