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?

Question

anonymous · Answer

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.

anonymous · Answer

@JoannaBlackwelder

joannablackwelder · Answer

I think it is A. She knows she will have to pay more but is willing to because she wants to diversify more.

anonymous · Answer

i thought its C

anonymous · Answer

well it could be/

joannablackwelder · Answer

I don't think it is a breakpoint violation, because she is wanting to out 10,000 less than the breakpoint into the fund and I wouldn't call that just below the breakpoint.

anonymous · Answer

nvm its A

joannablackwelder · Answer

She is also voluntarily choosing it.

anonymous · Answer

theres 3 choices with disdiversified

joannablackwelder · Answer

Ok. :)

joannablackwelder · Answer

It's not be because she is not hoping for higher returns. She is taking less.