Question

The image shows Gale's investments during one year.

Investments during One Year





What does the information demonstrate about Gale’s investments?

If she had purchased only the stock and had not diversified her investments, she would have lost money.
If she had diversified her investments further, her profits would have been considerably larger.
If she had put money in her savings account only and had not diversified, her profits would grow.
If she had diversified her investments further, she would have reduced her risk but made less of a profit.

Answer 1

"If she had diversified her investments further, she would have reduced her risk but made less of a profit."

Reason: spreading money into safer, lower‑return assets lowers the chance of large losses (reduces risk) but also typically lowers overall returns compared with concentrating in higher‑return (higher‑risk) investments.