the image shows gales investments during one year. investments during one year gale starts with $1,000…

the image shows gales investments during one year. investments during one year gale starts with $1,000. gales investments: - savings account: $200, 1% return - mutual fund: $600, 7% return - stock: $200, -10% return value 1 year later: $1,024 profit: $24 what does the information demonstrate about gales investments? if she had purchased only the stock and had not diversified her investments, she would have lost money. if she had diversified her investments further, her profits would have been considerably larger. if she had put money in her savings account only and had not diversified, her profits would grow. if she had diversified her investments further, she would have reduced her risk but made less of a profit.

the image shows gales investments during one year. investments during one year gale starts with $1,000. gales investments: - savings account: $200, 1% return - mutual fund: $600, 7% return - stock: $200, -10% return value 1 year later: $1,024 profit: $24 what does the information demonstrate about gales investments? if she had purchased only the stock and had not diversified her investments, she would have lost money. if she had diversified her investments further, her profits would have been considerably larger. if she had put money in her savings account only and had not diversified, her profits would grow. if she had diversified her investments further, she would have reduced her risk but made less of a profit.

Answer

Answer:

If she had purchased only the stock and had not diversified her investments, she would have lost money.

Explanation:

Step1: Analyze stock - only scenario

The stock has a - 10% return. If she had invested all $1000 in stock, she would have $1000\times(1 - 0.1)=1000\times0.9 = 900$, a loss.

Step2: Analyze other options

  • Diversifying further doesn't necessarily mean larger profits as it depends on the performance of additional investment vehicles.
  • Putting money only in savings account ($200 with 1% return) would not grow profits as much as the diversified portfolio in this case.
  • Diversifying further doesn't always reduce risk and make less profit; it depends on the correlation and performance of different assets.