To advise investors on the financial market according to their financial risk tolerance it is necessary to apply a valid and reliable instrument measuring financial risk tolerance. We develop a screening instrument which assesses different facets of financial risk tolerance, namely, risk propensity, risk attitude, risk capacity, and risk knowledge. First, an item pool was generated and discussed with lay people as well as financial advisors to assure the questions' understandability and

more »

... ility. Second, the most coherent and practice-oriented questions were tested empirically to determine four scales representing the four facets of risk tolerance. Third, resulting items were assessed using a representative sample of Austrian citizens interested in saving, stock trading, and investing, and psychometric quality of the instrument was determined. ABOUT THE AUTHORS Ingrid Wahl is professor, researcher, and senior lecturer at the FernFH Distance-Learning University of Applied Sciences. Her research focusses on cooperation in social dilemmas, diversity in organizations as well as on working and learning in the virtual context. As economic psychologist, she also examines people's behavior in the economic context, such as tax evasion and financial behavior. Measuring financial risk tolerance complements her scientific work. Erich Kirchler is professor of applied psychology (economic psychology) at