Assume that a wealthy woman comes to you looking for some investment advice. She is in her early forties and has $250,000 to put into stocks. She wants to build up as much capital as she can over a 15-year period and is willing to tolerate a “fair amount” of risk.
a. What types of stocks do you think would be most suitable for this investor? Come up with at least 3 types of stocks, and briefly explain the rationale for each.
b. Would your recommendations change if you were dealing with a smaller amount of money—say $50,000? What if the investor were more risk-averse? Explain.