Answer :
Final answer:
Timothy Calibe should continue to evaluate his investment in XYZWidgets.com after purchasing. Diversifying his portfolio is crucial to managing risk, and investing in multiple asset classes is more beneficial than concentrating in one company's various securities. Therefore option A is correct.
Explanation:
. Investing in stocks should be a dynamic process where frequent evaluation and reassessment are essential to ensure that the investment continues to align with one's financial goals and risk tolerance. Good investment practices include keeping up-to-date with the company's financials, market trends, and diversifying your portfolio to manage risk more effectively. Diversification helps to spread out risk as it involves investing in a variety of assets to reduce the impact of any single investment's poor performance.
Buying additional common stock or other forms of equity such as preferred stock in the same company would not reduce business failure risk; in fact, it can potentially increase it by concentrating the investor's funds too heavily in one firm. Diversifying a portfolio, as recommended by financial advisors, typically involves incorporating a mix of asset classes, such as mutual funds that represent many different companies and industries. Buying bonds could be part of a diversification strategy, but those bonds should come from a range of issuers, not just XYZWidgets.com.
