Question

Natalie wants to invest $40,000 in mutual funds. If she invests $30,000 or more in the NovelOptions family of funds, she pays no load. However, she does not want all her savings dependent on one company, so she puts $20,000 in NovelOptions funds and $20,000 in EdStars funds. How is Natalie's decision best described?

Answer 1

Select the best answer from the choices provided.
She is accepting costs that will reduce her returns for the security of more diversification.
She is hoping for higher returns but at the risk of having a less diversified portfolio.
She and her broker are probably committing a breakpoint violation.
She has diversification of security types but not of sectors or regions.