What should an analyst do when asked to invest a retirement plan in the employer's stock?

An analyst should consider investing a portion of the retirement plan in the employer's stock if it is prudent to do so. Prudent investing involves assessing the appropriateness of the investment based on various factors including the financial performance of the stock, the overall diversification of the retirement portfolio, and the specific goals and risk tolerance of the retirement plan.

In this context, "prudent" implies that the analyst must act in the best interest of the beneficiaries of the retirement plan while also adhering to the fiduciary responsibility to manage investments wisely. If the analysis shows that the employer's stock can contribute to achieving the investment objectives without exposing the retirement plan to undue risk, then allocating a portion of the assets may be justified. This approach ensures that the investment strategy does not overly concentrate funds in one particular asset, which could increase risk.

Furthermore, this option balances the potential benefits of owning employer stock, such as possible appreciation and employee loyalty, while also considering the necessity of maintaining a diversified and prudent investment strategy.