You decided to try your luck in stock market by investing in stocks of a single company. Your friend is an investor in stock market for several years and he has investments in large diversified portfolio. You thought it would be good idea to discuss with your friend and get some information about stock market investment. Your friend advised you to invest in stocks of XYZ Co., and said that he was also considering to include stocks of XYZ Co. in his diversified portfolio. 

Explain how your approach/method of risk assessment/computation of the returns of XYZ stocks differsfrom that of your friend who was considering to include stocks of XYZ Co. in his diversified portfolio.

Answer rating: 100% (QA)

As an individual investor focusing on a single company your approach to risk assessment and computation of returns for XYZ Co would likely differ from your friends approach who has a diversified portf... View the full answer