Suppose there are two options to invest in stocks:

Option 1: Invest in one single stock

Option 2: Invest in a portfolio consisting of different stocks

What kinds of risk you face for option 1 and options 2? Compare the risks of the two options.

2. You are interested in investing in a portfolio including stocks A, B, C and D. You have talked to three different financial strategists: Dan, Paul and Mary. Assuming that the risk-free rate is 4% and the expected return on the market is 12%, based on the below data from each strategist, which one will you go with? Explain why that would be your decision (choose one person).

Stock	Beta	Dans Investment	Paul's Investment	Mary's Investment
A	1.3	2500	5000	10,000
B	1.0	2500	5000	10,000
C	0.8	2500	5000	-5000
D	-0.5	2500	-5000	-5000