Question

which investor is making a common error? an employee of a popular hardware store who invests only in that company’s stock someone who buys stock in both domestic and more risky international companies someone who sells the slumping stock while they are still able to make a profit based on what they paid an employee of a popular software company who invests in many similar companies

Explanation:

To determine the investor making a common error, we analyze each option:

• First option (hardware store employee investing only in that company's stock): This is a common error called "putting all eggs in one basket" or lack of diversification. If the company faces issues, the investment is at high risk.
• Second option (buying domestic and international stocks): This is diversification, a good practice to spread risk.
• Third option (selling slumping stock with profit): Selling to lock in profit when still possible is a reasonable move, not an error.
• Fourth option (software company employee investing in similar companies): While industry - specific, investing in multiple similar companies is still a form of diversification within the industry, better than investing in only one company.

The key error is lack of diversification, seen in the first option.

Answer:

an employee of a popular hardware store who invests only in that company’s stock