East Coast Yachts: Diversification
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Considering the effects of diversification, how should Sarah respond to the suggestion that you invest 100 percent of your 401(k) account in East Coast Yachts stock?
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Solution Summary
This solution suggests how Sarah should respond to the suggestion of investing 100 percent in East Coast Yachts.
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If I were Sarah, I would point out that investing 100% in company stock is NOT conservative. If I (or the employee) want to be conservative, I would recommend the bonds and mutual funds. However, because I'm the employee, I'm going to base my answer from my personal perspective... an aggressive investor. (Note: The closer to retirement the employee is, the more I would sway toward conservatism or "income" ...
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