Which of the following is a key component of an investor's risk profile?

A key component of an investor's risk profile is the investment horizon. This refers to the length of time an investor expects to hold an investment before needing to access the funds. The investment horizon greatly influences an investor's ability to take on risk. Generally, the longer the investment horizon, the more risk an investor may be willing to tolerate, as there is more time to recover from potential losses. For example, a younger investor with a longer time frame before needing the funds may choose to invest in assets that are volatile but have the potential for higher returns, while an investor nearing retirement may prefer more stable, lower-risk investments.

Age does play a role in an investor's risk profile, as it often correlates with investment horizon, but it is not as direct a factor as the investment horizon itself. Geographical location and social status can influence an investor's economic environment and access to certain investments, but they are less critical in determining the inherent risk tolerance than the investment horizon, which directly dictates the strategy an investor might adopt based on their long-term financial goals.