CH O O S IN G AP P RO P RIATE STO C S. Assume that you’ve just inherited $500,000 and have decided to invest a big chunk of it ($350,000, to be exact)

in common stocks. Your objective is to build up as much capital as you can over the next 15 to 20 years, and you’re willing to tolerate a “good deal’’ of risk.

a. What types of stocks (blue chips, income stocks, and so on) do you think you’d be most interested in, and why?

Select at least three types of stocks and briefly explain the rationale for selecting each.

b. Would your selections change if you were dealing with a smaller amount of money—say, only $50,000? What if you were a more risk-averse investor?. LO1