andrea has $500 in the bank that she wants to invest in the stock market. she also wants to add $50 per…

andrea has $500 in the bank that she wants to invest in the stock market. she also wants to add $50 per month into this account from her part - time job. which is the best way for andrea to build up a diversified portfolio of stocks? a. by staying away from stocks until she has at least $10,000 to invest. b. by investing her money in a stock mutual fund. c. by buying a single stock recommended by a friend. d. by dividing her money into five pieces and buying a different stock with each piece.

andrea has $500 in the bank that she wants to invest in the stock market. she also wants to add $50 per month into this account from her part - time job. which is the best way for andrea to build up a diversified portfolio of stocks? a. by staying away from stocks until she has at least $10,000 to invest. b. by investing her money in a stock mutual fund. c. by buying a single stock recommended by a friend. d. by dividing her money into five pieces and buying a different stock with each piece.

Answer

Brief Explanations:

Stock mutual funds pool money from multiple investors and invest in a diversified portfolio of stocks. For someone with a relatively small initial amount ($500) and adding a small amount monthly, it's a good way to achieve diversification without the need for in - depth stock - picking knowledge. Option A delays investment opportunity, option C lacks diversification with a single stock, and option D may not be sufficient for true diversification with a small amount divided among five stocks.

Answer:

B. By investing her money in a stock mutual fund.