Question

"A customer who earns $80,000 per year is 35 years old, married to a non-working spouse, has a 5-year-old child, has no retirement savings and does not have a will. This customer receives $250,000 in a single stock as an inheritance from her deceased aunt. What is the first thing that the customer should do?"

Answer 1

It should diversify the stock position.

Step-by-step explanation:

The first thing the customer should do is that it should diversify the stock position because it is a single stock holding and it must be diversified this stock. One thing that is the main concern for the customer that he does not have any retirement savings and he has only inheritance stock. If the market situation becomes adverse then he may face huge losses because he is a single stock holding. However, the diversification will reduce the risk of loss so he should diversify it.