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    Mike Has Decided That It Is Time He Put His

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    Amit Pandey
    Mike initially invested in two stocks but was told his portfolio lacked diversification. Over time, the broker convinced Mike to sell those stocks and buy 14 stocks, 10 of which were in technology. While Mike thought he had a diversified portfolio now, his cousin noted the heavy focus on technology. It seems the brokerage specialized in technology and primarily recommended technology stocks to Mike without properly diversifying his portfolio across different sectors.

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    Mike Has Decided That It Is Time He Put His

    Uploaded by

    Amit Pandey
    31 views1 page
    Mike initially invested in two stocks but was told his portfolio lacked diversification. Over time, the broker convinced Mike to sell those stocks and buy 14 stocks, 10 of which were in technology. While Mike thought he had a diversified portfolio now, his cousin noted the heavy focus on technology. It seems the brokerage specialized in technology and primarily recommended technology stocks to Mike without properly diversifying his portfolio across different sectors.

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    Mike Has Decided That It is Time He Put His

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    Mike initially invested in two stocks but was told his portfolio lacked diversification. Over time, the broker convinced Mike to sell those stocks and buy 14 stocks, 10 of which were in technology. While Mike thought he had a diversified portfolio now, his cousin noted the heavy focus on technology. It seems the brokerage specialized in technology and primarily recommended technology stocks to Mike without properly diversifying his portfolio across different sectors.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    31 views1 page

    Mike Has Decided That It Is Time He Put His

    Uploaded by

    Amit Pandey
    Mike initially invested in two stocks but was told his portfolio lacked diversification. Over time, the broker convinced Mike to sell those stocks and buy 14 stocks, 10 of which were in technology. While Mike thought he had a diversified portfolio now, his cousin noted the heavy focus on technology. It seems the brokerage specialized in technology and primarily recommended technology stocks to Mike without properly diversifying his portfolio across different sectors.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Solved: Mike has decided that it is time he put his

    Mike has decided that it is time he put his money to work for him. He has accumulated a
    substantial nest egg in a savings account at a local bank, but he realizes that with less than 3%
    interest he will never reach his goals. After doing some research he withdraws the money,
    opens an account at a local brokerage firm, and buys 500 shares of a large blue chip
    manufacturing company and 600 shares of a well known retailing firm. From the beginning, his
    broker emphasizes that his portfolio is not sufficiently diversified with just two stocks. Over time,
    the broker convinces

    Mike to sell the shares of the two stocks to purchase stock in other companies. Two years later,
    Mike owns stock in 14 different companies and views his portfolio as well diversified. His cousin,
    Ed, who has recently graduated from business school, looks at his portfolio and comments, “
    You are not very well diversified, as 10 of the stocks you own are considered technology
    stocks.” Mike tells Ed that he followed his broker’s recommendations and sold his original
    stocks to purchase the new stocks in order to attain a diversified portfolio. Ed comments that the
    brokerage firm where Mike does business is noted as a specialist in technologies. Mike is
    disappointed because he thought he was getting good advice toward building a well diversified
    portfolio. After all, Mike followed his broker’s advice to the letter, and why would his broker give
    a client bad advice?

    a. Comment on Mike’s broker’s ethics in recommending the sale of the original stocks to
    purchase a portfolio weighted so heavily toward technologies. Include in your discussion
    reasons why the broker may have followed the course of action that he did.

    b. To achieve diversification, what other course of action could Mike have taken that would not
    involve buying individual stocks in a variety of companies?

    Mike has decided that it is time he put his

    ANSWER
    https://solvedquest.com/mike-has-decided-that-it-is-time-he-put-his/

    Reach out to [email protected] for enquiry.


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