Jackson is a senior in college. He and hi and talk openly about things, includin
ID: 2781788 • Letter: J
Question
Jackson is a senior in college. He and hi and talk openly about things, including money and estments. Tanner is a business major and tells Jacks that h a business major and tells Jackson uld put all of his savings into a stock of an internet . He claims that it is a sure way to pany that is doing well ake money. e Jackson is hesitant but also confused because com he knows very little about investing Is Tanner giving Jackson sound advice? Why or why not? 2 Is investing even a good thing for Jackson to do at this time? What options does Jackson have? Predict the financial 4 Ifyou were Jackson, what would you do? Explain your answer outcome of those options.Explanation / Answer
1. No Tanner is not giving Jackson a good advice because he is still in college and he should not be taking such huge risk as to putting all the money in a single stock rather he should diversify his portfolio by investing in other assets and shares of other companies
2. Investing is a good thing at this time if he has extra money because the early you start the more the power of compounding you will get
3. Jackson has 1) option to invest in internet company. Outcome: He would be having a lot of risk-if the internet company did not perform well he might incur huge loss but if the company performed well he would pocket huge profit 2) option to diversify his portfolio. Outcome: His risk would be limited so even if the internet company does not perform well, he would lose on only a small portion of his amount 3) option to not invest at all and keep the money in bank account. Outcome: His amount would be safe. He would lose on the potential profit but at the same time he would be protected from potential losses.
4. If I were Jackson, I would first myself research about the internet company and if it seemed good investment, invest some money in that stock and the remaining I would diversify by holding fixed assets, real estate, other shares, etc.
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