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Assume that stock market returns do follow a single-index structure.An investment fund analyzes 750 stocks in order to construct a mean-variance efficient portfolio constrained by 750 investments.They will need to calculate ________ estimates of firm-specific variances and ________ estimate/estimate(s) for the variance of the macroeconomic factor.
Economic Efficiency
A situation in which resources are optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.
Market
A system or an environment where buyers and sellers interact to trade goods, services, or financial instruments.
Free-rider Problem
A situation where individuals consume goods or services without paying for them, which typically occurs with non-excludable and non-rival public goods.
Market Resources
The assets, materials, and inputs used to produce goods and services and are made available through the market.
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