Your parents give you $\backslash (\backslash$$ $5,000\backslash )$ as a graduation gift and you decide to invest the money in the stock market. If you are risk$-$averse, should you purchase some stock in a few different companies through a website with low transaction fees or put the entire $\backslash (\backslash$$ $5,000\backslash )$ into a mutual fund?

You should put the money into a mutual fund. This reduces your risk by allowing you to acquire fractions of shares in the large number of companies included in the fund, enabling you to spread your risk across a larger number of companies.

You would only be able to invest in mutual funds that have very few companies in their pool. Mutual funds require that every investor purchase at least one full share in each company represented in the fund, so you should purchase shares independently.

You should purchase some stock independently in a few different companies. This will increase the riskiness of the investment, adding to the excitement.You should purchase some stock independently in a few different companies. This will reduce your risk compared with a mutual fund, as you will only be exposed to potential problems in a small number of companies.